Cryptocurrency Taxation—Recent Guidance Is a Good Start, But More Is Needed

On Oct. 11, 2019, the Internal Revenue Service issued Revenue Ruling 2019-24 to address the tax consequences of cryptocurrency hard forks and airdrops. The crypto community has been anxious to receive definitive guidance since the IRS issued Notice 2014-21. Although taxpayers and tax professionals have been waiting for guidance dealing with a plethora of issues relating to taxation of cryptocurrencies, the Ruling is strictly narrowed to an analysis of the U.S. federal income tax consequences of hard forks and airdrops. In addition to the Ruling, the IRS released a list of Frequently Asked Questions “FAQs” to elaborate on Notice 2014-21. The FAQs create an expectation of compliance in a milieu of uncertainty.

On the same day the Ruling was released, the leaders of the U.S Commodity Futures Trading Commission, the Financial Crimes Enforcement Network, and the U.S. Securities and Exchange Commission issued a joint statement to warn persons engaged in activities involving digital…