Bitcoin

[Beersheba]

Last couple years, IRS has gone after cryptocurrency like a pig after slop.

Wonder if they are going to be so anxious now that these currencies have crashed, and people now have LTCapital Losses.

[Dude]

I may be over generalizing but I think crypto is wrapped up in the initiative to go after foreign accounts, FBAR and FACTA. Based on their hiring initiative it looks like IRS has been ramping up for more enforcement. Government moves slowly and does not pivot easily so in short I think the crypto examinations will only increase regardless of the value.

[Rapid Robert]

Isn't this just common sense, that you spend your time and resources where the money is? Do traffic cops spend their time watching for speeders on the roads in Death Valley, or do they spend more time on urban freeways/tollways?

"now that these currencies have crashed, and people now have LTCapital Losses."

Don't jump the gun, it's not even half way through the year yet, plus gains/losses are not recognized until they are realized, at least when it comes to selling capital assets. (I'm assuming there is no such thing as a "day trader" in cryptocurrencies, but I could simply be uninformed).

I'm not sure unreported LT cap gains on crypto contribute nearly as much to the tax gap as claims of loss due to fraud/theft of crypto assets. After all, LT cap losses can only be taken against ordinary income at up to $3k per year, and evaporate upon death. But fraud/theft losses can end up as deductible against ordinary income (Sec. 1231), and how do you really prove it anyway, if a crypto exchange did not handle the transaction? (and if the exchange did handle the transaction, then why can't the theft be prosecuted?)