The IRS has been increasingly interested in tax compliance by those who receive income in virtual or cryptocurrencies. According to the agency, income from investments in these currencies are taxed at the appropriate capital gains rate.
In 2014, the IRS made clear that it considers Bitcoin and other cryptocurrencies to be property, not currency. These convertible virtual currencies, or CVCs, are therefore taxed as capital gains.
Late last month, the IRS began sending letters to over 10,000 cryptocurrency investors warning them that they may owe taxes on their crypto gains. Whether you received a letter or not, you should be aware that cryptocurrency tax compliance is currently a top priority for the IRS.