Virtual currencies, or cryptocurrencies, continue to be a dizzying draw to investors. Many times, the investors are not considering, or fully aware of, the tax implications of their activity in this exciting new asset class.
The IRS, however, has been keenly aware of the obligations in this area and has recently raised its scrutiny and compliance level, particularly with the guidance issued in October of 2019. In addition, improving technology has enabled the IRS to track and send 10,000 letters to taxpayers who may have not fully or correctly reported cryptocurrency transactions. Indeed, the new 1040 IRS filing form for the 2019 tax year now includes a “Question #0” at the very beginning of the form asking about any taxpayer activity with virtual currencies – quite a focus point and area of concern for taxpayers and preparers!
Given both the IRS focus on and accelerating proliferation of digital assets, Thomson Reuters recognizes the additional challenge that this digital asset class introduces and is committed to providing industry-leading solutions in this new frontier of tax reporting. Therefore, we’re now revealing that the Individual GoSystem Tax RS product will lead the way by launching a first in class Virtual Currency Organizer for 1040 preparation. This organizer will be a comprehensive single-point of data entry and review for virtual currency transactions including exchanges, forks, purchases and payment for services rendered. Preparers will now for the first time be able to see and review these transactions in a central location and have the information properly reported on the appropriate tax forms.
The introduction of the Virtual Currency Organizer is a great innovation for our clients, but gathering trusted source data for the cryptocurrencies given their decentralized nature is also a key part of the challenge. Acquiring reliable data is one of the most difficult complexities in cryptocurrency reporting and leads to a great deal of frustration for both taxpayers and preparers alike. To tackle this challenge, Thomson Reuters has entered into a collaboration with a firm that specializes in the accounting and reporting of cryptocurrencies and blockchain assets.
Verady and their Ledgible platform are the worldwide leader in the field of tracking, reporting, and accounting of cryptocurrency and blockchain assets. Ledgible allows Investors, tax preparers and financial institutions to perform AICPA SOC assured portfolio tracking and reporting of cryptocurrency activity. Ledgible has been specifically built to simplify the painful and complex process of consolidating records from exchanges, wallets, blockchains, and other cryptocurrency data sources. Hours spent in spreadsheets matching records and performing reconciliation can be reduced to just a few minutes of setup in Ledgible. With a button click, Ledgible users can create reports ready for GoSystem Tax and UltraTax – both of which consume these reports to streamline preparation and minimize risks with full data auditability.
Thomson Reuters, both through the introduction of the Virtual Currency Organizer and the collaboration with Verady, continues to anticipate our customers’ needs and provide innovative and trusted solutions where they are most needed.