Scivantage's End-to-End Tax Solution Readies Financial Services Firms for New IRS Crypto Taxation Guidelines
The IRS releases first new crypto guidance in 5 years, sending a strong signal to investors and financial services firms that increased enforcement is here.
JERSEY CITY, N.J., Oct. 17, 2019 /PRNewswire-PRWeb/ -- Scivantage®, a SaaS provider of End-to-End Tax and Digital Wealth solutions, responds to the latest published IRS Cryptocurrency guidelines to prepare its clients for compliance.
The latest information from the IRS reinforces guidance on the tax treatment of cryptocurrency transactions applicable to taxpayers that hold cryptocurrencies as capital assets. Released October 9, 2019, the guidance comes in the form of a new set of Frequently Asked Questions (FAQs) and a separate revenue ruling (Rev. Rul. 2019-24).
Maxit E2E, the leading tax reporting provider for cryptocurrencies, is fully compliant and the only true end-to-end tax solution. By combining cost basis and information reporting in a single-vendor solution, Maxit E2E improves data quality and reduces multi-vendor risk and expense.
"One of the most important aspects of the IRS FAQ and Rev. Rul. 2019-24 is that they were published as a statement of current law," said Cameron Routh, Chief Strategy Officer at Scivantage. "In other words, they are not prospective and are meant to apply to past transactions. Investors who did not follow these guidelines when reporting cryptocurrency trading in previous years, or failed to report at all, might need to revisit previous tax filings. It also means that financial firms will face increased demand for this data. We built the compliance features of Maxit E2E for cryptocurrency specifically with this in mind," added Routh.
A clear takeaway from the IRS guidance is that coins received in a hard fork are taxable as ordinary income. As a result, there is a taxable event at the time of hard forks and basis from old coins should not be allocated to new coins for cost basis calculations. Maxit E2E properly supports this treatment, removing complexity from investors and financial firms.
On the issue of fair market valuation, the FAQs focus not only on the date of when cryptocurrency is received but also the time. The requirement that FMV is a date and time concept could present challenges to investors who have limited access to proper documentation.
Where there are multiple crypto units, or "lots", that are being sold, the IRS is allowing for both specific identification and FIFO. To address this, Maxit E2E supports both accounting methods, ingesting the transaction information for all units of a specific virtual currency held in a single account and each specific unit's unique digital identifier, allowing investors to use either FIFO or specific identification for each trade.
Also worth noting, while the FAQ and Rev. Rul. 2019-24 answer some questions for taxpayers, there was no additional guidance for brokers and other financial intermediaries on Form 1099 or other third-party information reporting obligations. This suggests that more guidance might be expected.
More information on the FAQs may be found here, https://bit.ly/2B1pd62.
"We are excited about the evolving digital currency industry and the possibilities it opens up for investors. Our compliant solutions simplify the complex tax rules facing financial institutions. Maxit E2E gives firms confidence in supporting their clients today and will continue to stay abreast of IRS guidelines in the future as rules further evolve," noted Routh.
About Scivantage
Scivantage® is a SaaS provider of Digital Wealth Management and End-to-End Tax solutions (including Cost Basis and Tax Reporting). Scivantage delivers intelligent and actionable information that goes beyond the boundaries of traditional financial software, helping to improve investment decisions, enable operational efficiencies and drive revenue growth. Leading financial institutions, including broker-dealers, mutual fund companies, bank custodians, trust and prime brokers, depend on Scivantage's mission-critical, cloud-based technology to achieve critical business insights, generate new revenue and build stronger customer relationships. For more information, please visit http://www.scivantage.com or contact us at +1.646.452.0050
SOURCE Scivantage
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