US Taxes 2020 – Virtual currency

Do you know that if you at any time during 2020 receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency, such as Bitcoin;  Litecoin, and XRP, or any other digital currencies that are stored in and transacted through designated software, applications, and networks in digital form,  that you would need to report this to the IRS on your2020 tax return?

It depends on the dealing; some might be subject to capital gain and require a valuation; others might be considered and dealt with as a regular income. A careful assessment and reporting would need to take place in order to avoid any misstatement on this subject of your tax return.

As per the Internal Revenue Services (IRS) guide, a transaction involving virtual currency includes, but is not limited to, the following:

• – The receipt or transfer of virtual currency for free (without providing any consideration), including from an air-drop or hard fork;
• – Exchange of virtual currency for goods or services;
• – A sale of virtual currency;
• – Exchange of virtual currency for other property, including for another virtual currency; and
• – A disposition of financial interest in virtual currency.

A transaction involving virtual currency does not include virtual currency held in a wallet or account, or the transfer of virtual currency from one wallet or account you own or control to another that you own or control if you disposed of any virtual currency that was held as a capital asset through a sale, exchange, or transfer.

For help in this area, please do not hesitate to contact us for support.