Cryptocurrency, or digital currency used to buy goods and services, is becoming increasingly common in Maryland divorce cases. Diving cryptocurrency in a divorce may prove complicated in comparison to splitting up other types of assets. Many former couples dealing with cryptocurrency may need to enlist the aid of someone with particular knowledge in this area.
Per CNBC, an estimated 20 million Americans now own cryptocurrency. What are some of the hurdles associated with handling and dividing cryptocurrency in a divorce?
Cryptocurrency is volatile, meaning it may have a particular value one day and then that value may plunge or inflate the following day. This presents challenges for divorce attorneys who are trying to place a value on it and divide it accordingly.
Assessing tax implications
There may also be tax implications associated with dividing cryptocurrency in a divorce. Divorcing parties may run into trouble if one of them did not report cryptocurrency income to the IRS on taxes. This is a common problem among those who owned cryptocurrency before tax forms relating to it underwent regular distribution. Parties may also run into capital gains issues relating to cryptocurrency, depending on circumstances.
A third cryptocurrency-related complication that may arise during divorce involves how one party transfers cryptocurrency to the other. The process involved in transferring cryptocurrency is often complex, and some of the options for doing so involve a certain level of risk. In some cases, doing so may require the help of a financial professional.
As ownership of cryptocurrency becomes more commonplace, cryptocurrency-related divorce issues may continue to arise.