IRS Draft 2020 Guidance Makes New Alterations to the 1040 form

The US tax agency went a notch higher in their surveillance role as they revealed last month that they will require returnees to state if they actually “acquire[d] any financial interest in any virtual currency” over the last financial year. As it stands, the agency plans to alter a requirement on the 1040 form for 2020 that will give effect to this new provision.

The Internal Revenue Service also recently released a set of “draft instructions”, to the effect that tax payers would need to signify in the affirmative if they traded any cryptocurrency. They will also notify if they swapped crypto for any product, goods or services, or traded  crypto for any real or personal property, or even any other crypto assets.

The draft also prescribes that respondents must signify a “yes” if they got crypto gifts or got any cryptocurrency for free, or via hard forks or airdrops.

For proper context, Airdrops are smart modes of driving adoption of a new token by freely distributing same to newly converted users or prospective users. Hard forks on the other hand are updates to a blockchain’s code that require users to update to the newest version of the code. Usually owners of the original tokens may continue to own the same quantity of tokens on the new blockchain.

The tax agency gave tax payers the leeway to not specify a “yes” if they just merely stored crypto through 2020 or merely transferred same from one digital wallet to another wallet of theirs.

As it is, the IRS expects the draft to be finally adopted  unless there are “unexpected issues” or new law requiring alterations.