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Yes. When you receive property, including virtual currency, in exchange for performing services,...
Do I have income when a soft fork of cryptocurrency I own occurs?No. A soft fork occurs when a distributed ledger undergoes a protocol change that does not...
Does virtual currency paid by an employer as remuneration for services constitute wages for employment tax purposes?Yes. Generally, the medium in which remuneration for services is paid is immaterial to the...
Does virtual currency received by an independent contractor for performing services constitute self-employment income?Yes. Generally, self-employment income includes all gross income derived by an individual from...
How do I account for a sale, exchange, or other disposition of units of virtual currency if I do not specifically identify the units?If you do not identify specific units of virtual currency, the units are deemed to have been...
How do I calculate my charitable contribution deduction when I donate virtual currency?Your charitable contribution deduction is generally equal to the fair market value of the virtual...
How do I calculate my gain or loss when I exchange my virtual currency for other property?Your gain or loss is the difference between the fair market value of the property you...
How do I calculate my gain or loss when I exchange property for virtual currency?Your gain or loss is the difference between the fair market value of the virtual currency when...
How do I calculate my gain or loss when I pay for services using virtual currency?Your gain or loss is the difference between the fair market value of the services you...
How do I calculate my gain or loss when I sell virtual currency for real currency?Your gain or loss will be the difference between your adjusted basis in the virtual currency and...
How do I calculate my income from cryptocurrency I received following a hard fork?When you receive cryptocurrency from an airdrop following a hard fork, you will have ordinary...
How do I calculate my income if I provide a service and receive payment in virtual currency?The amount of income you must recognize is the fair market value of the virtual currency, in U.S....
How do I determine if my gain or loss is a short-term or long-term capital gain or loss?If you held the virtual currency for one year or less before selling or exchanging the virtual...
How do I determine my basis in cryptocurrency I received following a hard fork?If you receive cryptocurrency from an airdrop following a hard fork, your basis in that...
How do I determine my basis in property I’ve received in exchange for virtual currency?If, as part of an arm’s length transaction, you transferred virtual currency to someone and...
How do I determine my basis in virtual currency I purchased with real currency?Your basis (also known as your “cost basis”) is the amount you spent to acquire the virtual...
How do I determine my basis in virtual currency I receive for services I’ve provided?If, as part of an arm’s length transaction, you provided someone with services and received...
How do I determine my basis in virtual currency that I have received in exchange for property?If, as part of an arm’s length transaction, you transferred property to someone and received...
How do I determine my basis in virtual currency that I received as a bona fide gift?Your basis in virtual currency received as a bona fide gift differs depending on whether you will...
How do I identify a specific unit of virtual currency?You may identify a specific unit of virtual currency either by documenting the specific unit’s...
How is virtual currency treated for Federal income tax purposes?Virtual currency is treated as property and general tax principles applicable to property...
I own multiple units of one kind of virtual currency, some of which were acquired at different times and have different basis amounts. If I sell, exchange, or otherwise dispose of some units of that virtual currency, can I choose which units are deemed sold, exchanged, or otherwise disposed of?Yes. You may choose which units of virtual currency are deemed to be sold, exchanged, or...
I received cryptocurrency in a peer-to-peer transaction or some other type of transaction that did not involve a cryptocurrency exchange. How do I determine the cryptocurrency’s fair market value at the time of receipt?If you receive cryptocurrency in a peer-to-peer transaction or some other transaction not...
I received cryptocurrency that does not have a published value in exchange for property or services. How do I determine the cryptocurrency’s fair market value?When you receive cryptocurrency in exchange for property or services, and that cryptocurrency is...
I received cryptocurrency through a platform for trading cryptocurrency; that is, through a cryptocurrency exchange. How do I determine the cryptocurrency’s fair market value at the time of receipt?If you receive cryptocurrency in a transaction facilitated by a cryptocurrency exchange, the...
I received virtual currency as a bona fide gift. Do I have income?No. If you receive virtual currency as a bona fide gift, you will not recognize income until you...
If I donate virtual currency to a charity, will I have to recognize income, gain, or loss?If you donate virtual currency to a charitable organization described in Internal Revenue Code...
If I engage in a transaction involving virtual currency but do not receive a payee statement or information return such as a Form W-2 or Form 1099, when must I report my income, gain, or loss on my Federal income tax return?You must report income, gain, or loss from all taxable transactions involving virtual currency on...
One of my cryptocurrencies went through a hard fork but I did not receive any new cryptocurrency. Do I have income?A hard fork occurs when a cryptocurrency undergoes a protocol change resulting in a permanent...
One of my cryptocurrencies went through a hard fork followed by an airdrop and I received new cryptocurrency. Do I have income?If a hard fork is followed by an airdrop and you receive new cryptocurrency, you will have...
Tax ConsequencesThe sale or other exchange of virtual currencies, or the use of virtual currencies to pay for...
The 2020 Form 1040 asks whether at any time during 2020, I received, sold, sent, exchanged, or otherwise acquired any financial interest in any virtual currency. During 2020, I purchased virtual currency with real currency and had no other virtual currency transactions during the year. Must I answer yes to the Form 1040 question? (3/2/2021)No. If your only transactions involving virtual currency during 2020 were purchases of virtual...
What is Virtual Currency?Virtual currency is a digital representation of value that functions as a medium of exchange, a...
What is cryptocurrency?Cryptocurrency is a type of virtual currency that uses cryptography to secure transactions that...
What is my holding period for virtual currency that I received as a gift?Your holding period in virtual currency received as a gift includes the time that the virtual...
What records do I need to maintain regarding my transactions in virtual currency?The Internal Revenue Code and regulations require taxpayers to maintain records that are...
When does my holding period start for cryptocurrency I receive?Your holding period begins the day after it is received. For more information on holding...
When my charitable organization accepts virtual currency donations, what are my IRS reporting requirements? (12/2019)A charitable organization that receives virtual currency should treat the donation as a noncash...
When my charitable organization accepts virtual currency donations, what are my donor acknowledgment responsibilities? (12/2019)A charitable organization can assist a donor by providing the contemporaneous written...
Where do I report my capital gain or loss from virtual currency?You must report most sales and other capital transactions and calculate capital gain or loss in...
Where do I report my ordinary income from virtual currency?You must report ordinary income from virtual currency on Form 1040, U.S. Individual Tax Return,...
Will I have to recognize income, gain, or loss if I own multiple digital wallets, accounts, or addresses capable of holding virtual currency and transfer my virtual currency from one to another?No. If you transfer virtual currency from a wallet, address, or account belonging to you, to...
Will I recognize a gain or loss if I exchange my virtual currency for other property?Yes. If you exchange virtual currency held as a capital asset for other property,...
Will I recognize a gain or loss if I pay someone with virtual currency for providing me with a service?Yes. If you pay for a service using virtual currency that you hold as a capital asset, then you...
Will I recognize a gain or loss if I sell or exchange property (other than U.S. dollars) for virtual currency?Yes. If you transfer property held as a capital asset in exchange for virtual currency,...
Will I recognize a gain or loss when I sell my virtual currency for real currency?Yes. When you sell virtual currency, you must recognize any capital gain or loss on the sale,...
