The IRS does not consider virtual currencies such as BItcoin to be the same as cash or money. They consider it to be an asset to be treated for tax purposes much like stock, when purchased, sold or held as an investment.
There are certain situations however when virtual currency is reportable the same as a foreign bank account on the FBAR form 114 which is used to report foreign bank and financial accounts. Failure to file this form each year can result in penalties of $10,000 or more. There are many reported court cases where the penalties for failing to file this form have resulted in penalties to one taxpayer of many hundreds of dollars or more.
Read more about the rules for reporting your virtual currency - when to do it and when not -to the IRS HERE.
If you have not been filing this form and think you may be required to do so, and want to avoid the high penalties, need assistance or have questions CONTACT US. We are CPAs and attorneys that have combined experience of over 60 years with US International Taxation.
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