FINAL INSTRUCTIONS REVISE VIRTUAL CURRENCY TRANSACTION LIST
For the 2020 tax year, taxpayers will need to answer the question on page 1 of Form 1040. The final version of the instructions to Form 1040 has revised the non-exhaustive list of transactions involving virtual currency by removing the purchase of virtual currency and the acquisition of a financial interest in virtual currency from the list. The final instructions read:
A transaction involving virtual currency includes, but is not limited to:
- The receipt or transfer of virtual currency for free (without providing any consideration), including from an airdrop or hard fork
- An exchange of virtual currency for goods or services
- A sale of virtual currency
- An exchange of virtual currency for other property, including for another virtual currency
- A disposition of a financial interest in virtual currency
The list can be utilized by taxpayers to determine how they should answer the question on Form 1040 on whether they have received, sold, sent, exchanged, or otherwise acquired any financial interest in virtual currency during the year.
The IRS is hoping to crack down on compliance reporting for cryptocurrency. Stanfield + O’Dell has a team of tax professionals well versed in cryptocurrency and compliance. If you have any questions or would like to discuss your cryptocurrency holdings, please contact us.