Legacy Tax & Resolution Services

Ask the Crypto TaxMan: If I combine two accounts into one, as in the case of moving it a relay token as a balancing connector for liquidity reasons,

This is such an excellent question that I am going to answer it in two parts.

Part one address the combining of accounts.  This transaction combines two separately identifiable properties into one, which is not a taxable event. Of course, when purchasing or selling a coin within the relay, it would be a taxable event.

Part two address disclosure.  The IRS has not provided any guidance on relays and as such some disclosure for a potentially uncertain position is prudent.   A tax position simply reflects your judgment of how the tax law applies to your circumstances. Some judgments are pretty straightforward, and some can be subject to interpretation. These judgments underpin uncertain tax position assessments. 

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