Jar of pennies (John Brueske/Shutterstock)
Cryptocurrency earned from carrying out small tasks valued as low as $1 is taxable, the U.S. Internal Revenue Service (IRS) said in a memo Friday.
- In a memorandum first reported by The Block, the IRS’ Office of Chief Counsel published a response to a June 29 request for clarification from the tax agent’s own Small Business/Self Employed Division.
- The question centered around whether crypto earned by an individual for performing a microtask through a crowdsourcing or similar platform was a taxable income.
- “Yes,” said Ronald Goldstein, IRS senior technician reviewer and memo author, “the convertible virtual currency received is taxable as ordinary income.”
- Goldstein added that cryptocurrency “acts as a substitute for real currency” and is therefore considered property for federal income tax purposes pertaining to section 61(a) of the IRS tax code.
- An example of microtasking included a company offering to pay workers in bitcoin for processing data or reviewing images.
- The value of crypto paid in exchange for microtasks are often small amounts that could be less than $1.
- Other examples included downloading an app and leaving a positive review; downloading games and reaching particular milestones; completing online quizzes; or registering accounts with various online services.
- According to the memo, these types of microtasks “may provide individuals with rewards” in the form of cryptocurrency and are thereby subject to the same regulations as regular money.
- The guidance comes at a time when the tax agency has been in crackdown mode to end suspected crypto tax avoidance, seemingly contradicting the advice of its own watchdog.
Disclosure
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.
https://www.coindesk.com/cryptocurrency-earned-from-carrying-out-microtasks-is-taxable-says-irs-memo
