Cryptocurrency Tax Problems in Sarasota: What the IRS Knows About Your Crypto

If you traded crypto in Sarasota and did not report the gains, the IRS already knows about it or will soon. Every major exchange is reporting transactions directly to the IRS. The era of anonymous crypto is over.

How the IRS Tracks Crypto

Coinbase, Kraken, Binance.US, and every other domestic exchange file Form 1099 reports. Starting in 2025, Form 1099-DA requires even more detailed reporting. If you sold, traded, or exchanged cryptocurrency, the IRS has a record. John Doe summonses have pulled account data from exchanges going back years.

Every Trade Is a Taxable Event

Swapping Bitcoin for Ethereum is a taxable event. Using crypto to buy a boat is a taxable event. Converting to a stablecoin is a taxable event. Many Sarasota crypto investors made dozens or hundreds of trades without realizing each one triggered a capital gain or loss calculation.

What to Do If You Have Not Reported

File amended returns or delinquent original returns before the IRS contacts you. Voluntary disclosure is always better than being caught. The penalties for willful failure to report are severe, but taxpayers who come forward proactively get treated much more favorably than those who wait for the letter.

If you already received a CP2000 or audit notice related to crypto, do not ignore it. The proposed adjustments are almost always inflated because the IRS does not have your cost basis. Get that information together and respond.