Until recently, the I.R.S. showed little desire to go after cryptocurrency income, since there was so little of it. But last year's boom changed all that. The agency has formed a team of specialists to investigate cryptocurrency-related crimes, including international money laundering and tax evasion. In November, after a yearlong lawsuit, the agency won a judgment that forced Coinbase, the largest American-based cryptocurrency exchange, to turn over account records for more than 14,000 customers. In January, Coinbase sent 1099-K forms to a number of its current users, informing them that their trading proceeds were being reported to the I.R.S. and reminding them to pay the taxes they owed.
All of this confusion has created a cottage industry of specialized accountants who can keep traders out of tax trouble. Many of these accountants are cryptocurrency fans themselves, and they are more likely than your average C.P.A. to understand concepts like airdrops, hard forks and other bits of confusing crypto-jargon.
Mario Costanz, the chief executive of the tax preparation firm Happy Tax, told me that an influx of cryptocurrency trading clients had helped his business more than triple in the past year. Last year, Happy Tax opened a separate cryptocurrency division, Crypto Tax Prep, which already has several thousand clients and is the fastest-growing segment of his business.
"We're preparing for a pretty insane last seven to 10 days of the tax season," Mr. Costanz said.
Laura Walter, a Tokyo accountant who goes by Crypto Tax Girl on Twitter, said she had been inundated with requests for help with tax preparation this year.
"A lot of crypto investors are younger and don't have a lot of experience trading stocks," she said. When they find out they owe taxes on their cryptocurrency trades, she said, "a lot of people are kind of shocked."
Part of what makes paying cryptocurrency taxes so difficult is that current I.R.S. rules treat cryptocurrency as property rather than currency. That means that every time you sell or transfer a digital coin for something else — whether you're cashing out Ether for dollars, trading Bitcoin for another cryptocurrency or using Ripple to buy a cup of coffee — you're creating a taxable event that must be separately recorded and accounted for.
Complicating matters even more, the timing of last year's cryptocurrency boom made for some extra tax headaches. The price of Bitcoin rose more than 1,500 percent last year, with most of the gains coming during the last two months of the year. High prices caused many traders to sell Bitcoin in 2017, in order to lock in their profits. But instead of cashing out into dollars, many traders put their 2017 profits into new cryptocurrency investments, most of which have lost money in this year's market slump. That decline has left some investors short of the funds they need to pay the taxes they owe on last year's gains.