Important Note: Bitleague does not provide tax advice. This material has been prepared for general informational purposes only and should not be considered an individualized recommendation or advice. The information contained herein is not intended to provide, and should not be relied on for, tax advice. Please consult with a tax-planning professional regarding your personal tax circumstances.
United States Income Taxes and Crypto
Cryptocurrency transactions may be taxable for United States taxpayers.
- The IRS identifies cryptocurrency as property, not currency
- Tax rules that apply to property transactions, like buying or selling stock, also apply to cryptocurrency
- For details please refer to IRS Notice 2014-21 https://www.irs.gov/pub/irs-drop/n-14-21.pdf
United States taxpayers have to pay taxes on the interest earned from cryptocurrency investments through Bitleague.
- Since the interest is paid at maturity date for the BTC term deposit, you will be taxed at the fair market value of the BTC you receive.
- This will be taxed at your income tax rate.
- If you then hold this cryptocurrency and sell it at a later date, it will be taxed as a short or long term capital gain, depending on how long you’ve held your coin. The cost basis will be what the fair market value was when you received it as an interest payment.
Borrowing USD against your crypto assets with a Bitleague loan is not a taxable event.
- This means you can access liquidity while keeping the same level of ownership and upside in your crypto holdings.
- The after-tax cost of borrowing can be reduced if you use the proceeds of the loan to make certain types of investments( buying equities, bonds, additional crypto assets or other securities). Certain investment-related expenses — like the interest on a loan from Bitleague — may be tax-deductible against your net investment income.
Important Note: Failure to report income, including income from the sale of cryptocurrencies, could result in a number of penalties specified in the tax code. Please consult with a tax advisor regarding your reporting obligation.
Will Bitleague be issuing me a 1099 Form?
Yes. US clients will receive a statement for your 1099 return shortly after the end of the year which details your account activity.
The statement generally includes: a) your cryptocurrency transactions list for the year, b) total dollar value of interest you received from Bitleague Term Deposits, and c) total dollar value of interest and other fees you paid over the year for your loans from Bitleague.
US Clients can provide this information to their tax preparers who can advise based on individual facts and circumstances.
International clients are responsible for determining their own tax obligations. Bitleague will provide international clients with a summary of their account activity upon request.
What is a B-Notice and why did I receive one from the IRS?
You may receive an IRS B-Notice for any discrepancies with your tax identification number (TIN) and legal name used by Bitleague to file the Form 1099-K with the IRS. The B-Notice will:
Let you know what additional information is needed or what needs to be corrected
Inform you what needs to be provided in addition to updating or correcting your name or TIN
To correct your TIN and/or name, please contact support.
For more information about the IRS B-Notice, please go https://www.irs.gov/businesses/small-businesses-self-employed/backup-withholding-b-program.