Guidance Needed Re Using Like-Kind Exchanges for Pre-2018 Cryptocurrency Exchanges

A taxpayer is generally not required to recognize a gain or loss as a result of a like-kind exchange under Internal Revenue Code (IRC) §1031. Significantly, IRC §1031 was amended by the Tax Cuts and Jobs Act of 2017, such that nonrecognition of gain or loss is only applicable to real property exchanges completed after December 31, 2017. Although there is agreement now that, after December 31, 2017, IRC §1031 clearly does not apply to cryptocurrency exchanges, a debate remains as to whether IRC §1031 is relevant to cryptocurrency exchanges before that date.

Recently, Bloomberg Law reported that on November 15, 2019, at the American Institute of CPAs fall tax division meeting in Washington, D.C., an IRS official, Attorney Christopher Wrobel, declared that the IRS does not have a blanket policy to prevent a taxpayer from using like-kind exchanges for pre-2018 cryptocurrency exchanges. Rather, as reported, the IRS will consider each taxpayer's facts and circumstances in order to reach a determination.

However, Bloomberg Law, noted that only a week earlier a different IRS official stated that recently published IRS "Frequently Asked Questions" guidance indicate that like-kind exchange treatment is not available for pre-2018 cryptocurrency exchanges.

Unless and until the IRS issues official guidance on this matter, taxpayers are especially encouraged to consult with an experienced tax professional before deciding to try to use like-kind exchanges for pre-2018 cryptocurrency exchanges.

If you have questions or concerns about cryptocurrency and like-kind exchanges, contact Frost & Associates, LLC today at 410-497-5947.

No Comments

Leave a comment
Comment Information
Email Our Team

Contact Us to Get Started Today

Located in the Washington, D.C area, we serve clients in the District of Columbia, Maryland and Northern Virginia, as well as across the country and overseas. For a free initial consultation, call 202-381-1261 or complete our brief online form.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Six Convenient Office Locations in and around the DC Metropolitan Area

Washington, D.C.
1050 Connecticut Ave NW #500
Washington, D.C. 20036

Phone: 202-618-1873
Fax: 888-235-8405
Washington Law Office Map

Columbia Office
10440 Little Patuxent Parkway, Suite 300
Columbia, MD 21044

Phone: 202-618-1873
Phone: 410-497-5947
Fax: 888-235-8405
Columbia Law Office Map

Annapolis Office
839 Bestgate Road
Suite 400
Annapolis, MD 21401

Phone: 202-618-1873
Phone: 410-497-5947
Fax: 888-235-8405
Annapolis Law Office Map

Fairfax Office
8280 Willow Oaks Corporate Drive
Suite 600
Fairfax, VA 22031

Phone: 202-618-1873
Phone: 703-988-4817
Fax: 888-235-8405
Fairfax Law Office Map

Rockville Office
199 E. Montgomery Avenue
Suite 100
Rockville, MD 20850

Phone: 202-618-1873
Phone: 240-599-5009
Fax: 888-235-8405
Rockville Law Office Map

Baltimore Office
400 East Pratt Street
8th Floor
Baltimore, MD 21202

Phone: 202-618-1873
Phone: 443-743-3381
Fax: 888-235-8405
Baltimore Law Office Map