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Illustration: Lazaro Gamio / Axios

Tax day is just two weeks away, but there are still a lot of unanswered questions for those who have gains (or losses) to report from investments in cryptocurrencies.

Bottom line: The IRS hasn't issued any guidance besides a short memo in 2014, even through the global cryptocurrency market cap grew from around $18 billion to over $600 billion last year, according to CoinMarketCap.

Yes, you need to pay taxes on crypto investments

Cryptocurrencies and digital tokens are classified by the U.S. government as commodities, meaning that they’re subject to capital gains tax laws.

  • In 2014, the Internal Revenue Service declared that cryptocurrencies are property, and issued its first, and still only, guidance that same year.
  • But by the IRS’s own estimates for 2015, only 802 Americans reported cryptocurrency transactions.
  • Experts expect a major uptick this year, based on the increased values and trading volume. Hiding transactions wouldn't be advisable as popular exchanges like Coinbase's GDAX and Gemini are highly regulated, and the IRS recently assembled an investigations team for cryptocurrency-related crimes.
What the fork?

The IRS hasn't provided guidance on several crypto-related tax issues that have arisen since 2014.

  • Perhaps the most pressing example is forks, such as when Bitcoin last year split into two separate versions, with each Bitcoin holder receiving an equal amount of Bitcoin Cash. Does that represent taxable income for someone who now owns both? What if they don't have access to their Bitcoin Cash because their exchange doesn't support it?
  • Then there's using Bitcoin (or other digital tokens) to pay for goods or services. Last year, a bipartisan bill was introduced to exempt transactions under $600, inspired by the foreign currency rules, as a way to eliminate this huddle to using cryptocurrencies for small purchases, although it hasn't passed yet and didn't make it into the recent tax reform bill.
  • Some have tried to apply the “like-kind exchange” rule, commonly used for real estate, which would defer gains if someone used one cryptocurrency to purchase a different one. The IRS hasn’t formally weighed in on this, but language in the recent tax bill suggests that it won’t be allowed.
It's complicated

People typically use spreadsheets to track crypto investments and manually tally their gains and losses.

  • Some people use multiple exchanges to buy and sell cryptocurrencies and tokens, and it can be tricky to determine cost basis when tokens are transferred from one to another.
  • Coinbase's GDAX exchange, for example, only sends tax forms to business customers and merchants (a 1099-K), but not to individuals (a 1099-B). And while individuals can access their purchase and sales history to help with tax calculations, it doesn’t include transfers in and out of their digital wallets.
  • On its website, GDAX recommends that customers keep their own records of these transactions. Same goes for Gemini, another popular exchange.
  • A small number of startups have spring up to tackle these issues, including Cointracking, Libra, and TokenTax. There also are some tax accountants in the know.
The IRS vs. Coinbase

In late 2016, the IRS summoned information about all of Coinbase’s customers between 2013 and 2015, and even sued the company after it initially declined to turn over the data.

  • Coinbase argued the request was too broad.
  • In November, the company was ordered by a federal judge to turn over information for a much smaller subset of its customers (ultimately about 13,000).
  • The battle raises questions about whether it will set a precedent that could allow the IRS to demand such information from other financial services institutions.

Go deeper

Minnesota schools "all over the board" with mask-wearing guidance

Illustration: Brendan Lynch/Axios

Minnesota and federal health officials are urging universal masking in schools this fall, but not all local districts are following suit so far.

Driving the news: The Minnesota Department of Health issued new back-to-school guidance Wednesday, encouraging mask use indoors for students and teachers regardless of vaccination status.

  • Unlike last year, the state won't mandate mask use. Decisions will be up to local districts and school boards.
Updated 1 hour ago - Sports

Olympics dashboard

Team USA's Simone Biles during the women's team final on day four of the Tokyo 2020 Olympic Games at Ariake Gymnastics Centre on Tuesday in Japan. Photo: Fred Lee/Getty Images

🤸🏾‍♀️: Simone Biles reacts to "love and support" after withdrawing from all-around gymnastics and team finals, citing her mental health

🏃: U.S. pole vaulter Sam Kendricks withdraws from Games after positive coronavirus test

🏊‍♂️: Caeleb Dressel wins gold in men's 100m freestyle —Bobby Finke wins gold in first men's Olympic 800m freestyle

📷: In photos: Tokyo Olympics day 6 highlights

🗓: The Olympic events to watch today

💵: Olympic athletes see more sponsorship opportunities

🏃‍: Female Olympians push back against double standard in uniforms

Go deeper: Full Axios coverage - Medal tracker

Felix Salmon, author of Capital
1 hour ago - Economy & Business

Giant earnings growth for the world's largest companies

Illustration: Aïda Amer/Axios

Never in the history of capitalism have the world's biggest companies grown as fast as the tech giants in recent years.

Why it matters: A series of stunning earnings reports this week — with another one likely to arrive Thursday afternoon, from Amazon — has underscored the astonishing growth among a group of companies that were already some of the most profitable of all time.

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