Cryptocurrencies are no longer exclusive to tech enthusiasts. Today, many everyday individuals—entrepreneurs, investors, freelancers, churches, and even small businesses—use crypto assets as a form of payment, investment, or even to receive donations.
However, most have no idea of the tax and accounting impact this can generate. In my experience advising taxpayers and organizations, I’ve noticed a recurring theme: lack of knowledge can be very costly, especially if the IRS believes you omitted information or misreported income.
What Does the IRS Say About Cryptocurrencies?
The IRS makes it clear in its official guidance:
“Virtual currency is treated as property for federal tax purposes. General tax principles applicable to property transactions apply.” (IRS, 2023)
This means that every time you sell, exchange, or use cryptocurrency to pay for something, it may trigger a capital gain or loss that must be reported. Even transferring funds from one wallet to another can have tax implications if you don’t track the cost basis.
Why Is This an Accounting Challenge?
Because there are no traditional bank statements or automatic reconciliations. Instead, you deal with:
- Decentralized wallets
- Transactions on foreign exchanges
- Peer-to-peer (P2P) payments
- Crypto donations to churches or nonprofits
And behind all this, the IRS is tracking transactions using forensic tools, like Chainalysis.
In forensic accounting, this means analyzing each individual transaction, rebuilding price histories, identifying beneficiaries, and documenting the full financial traceability.
What Should You Do If You Handle Crypto?
If you’re an individual, a small business, or even a church accepting crypto donations, you should:
- Keep detailed records of dates, market values, and wallets.
- Use tools like CoinTracker or Koinly to generate accurate tax reports.
- Consult an accountant familiar with both IRS regulations and the digital asset ecosystem. Conclusion
The crypto economy is here to stay, and as accountants, we must adapt and guide responsibly. It’s not just about proper reporting—it’s about protecting your wealth as regulations evolve.
If you’re working with cryptocurrencies and are unsure how to document, report, or include them in your financial statements, I can help you gain clarity and stay compliant with confidence.
Schedule a personalized consultation and let’s take the next step together.
By José Jiménez, MACC
Bachelor’s in Accounting | Master’s in Accounting