Taylor Weinstein, counsel in the firm's Tax and Investment Management Groups, was recently interviewed by Time magazine on how to manage the tax implications of investing with cryptocurrency. According to Weinstein, crypto is "an area where the IRS is looking heavily to audit, because I think they see it as a high revenue raiser."
Weinstein goes on to note that the 1099-K form is mission critical, as many crypto exchanges have started issuing a tax form called the 1099-K for their most active traders (i.e. those that have exceeded $20,000 in gross payments and 200 separate transactions). “This is the IRS's number one line of defense right now, because those 1099-Ks are filed with the IRS at the same time as they are delivered to the recipient...(i)t is going to be the IRS's weapon in finding taxable crypto transactions.”
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