Virtual Currency Transactions and Form 1040 (Course Id 2243)

• Who is this course for?
  This course is designed for CPAs, accountants, and IRS Enrolled Agents who need Continuing Professional Education (CPE), particularly those handling clients engaged in virtual currency transactions.

• What is this course about or what problem does this course solve?
  The course addresses the growing need for tax professionals to understand the nature, transactions, and tax treatment of virtual currency as its usage becomes more widespread.

• How can the knowledge from this course be used?
  The knowledge can be applied to accurately calculate cost basis, apply U.S. tax laws, and report virtual currency transactions properly on Form 1040.

• Why is this course important to a CPA, Accountant, or IRS Enrolled Agent?
  It is essential for tax professionals to remain compliant with evolving IRS regulations and to competently advise clients involved in virtual currency transactions.

• When is this course relevant or timely?
  This course is especially timely due to the increasing prevalence of virtual currency usage and the IRS's growing focus on ensuring proper reporting of such transactions.

• How is a course like this consumed or used?
  The course is delivered via self-study in text format and includes review and final exam questions; participants must pass the final exam with a score of 70% or higher to earn 2 CPE and IRS credits.

According to a survey done by the Pew Research Center whose results were published in April 2023, 17% of Americans indicated they personally have invested in, traded or otherwise used virtual currency¹. Additionally, the number of people investing in or engaging in transactions involving virtual currency continue to increase. These statistics strongly suggest that tax preparers must be aware of the nature of virtual currency and its tax treatment. It's to provide that awareness that Tax Treatment of Virtual Currency was written.

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[1] The Pew Research Center fact sheet may be accessed at https://www.pewresearch.org/short-reads/2023/04/10/majority-of-americans-arent-confident-in-the-safety-and-reliability-of-cryptocurrency/

NASBA QAS - Text - NASBA Registry - IRS Enrolled Agents - 2243

Course Learning Objectives

• recognize the methods of obtaining and storing virtual currency
• describe how transactions involving virtual currency work
• understand the basic nature of blockchains
• apply the existing U.S. tax laws to virtual currency transactions
• identify when and where to report taxable virtual currency events and transactions

Chapter 1
Nature of Virtual Currency

• describe virtual currency
• explain how central bank digital currency (CBDC) is used
• recognize how stablecoins differ from unbacked cryptocurrency
• describe how virtual currency networks maintain security
• recognize how blockchain is employed with respect to virtual currency transactions

Chapter 2
Tax Treatment and Reporting

• calculate the adjusted cost basis of virtual currency that is purchased, mined, or received as a gift
• calculate the adjusted cost basis of virtual currency that is Apply existing tax law to transactions involving virtual currency
• describe the tax treatment of virtual currency given as a charitable gift
• recognize the tax treatment given virtual currency when less than all is sold, exchanged, or otherwise disposed of

Course Learning Objectives

Course Introduction

Chapter 1 - Nature of Virtual Currency

Learning Objectives

Introduction

The Lexicon of Virtual Currency

Virtual Currency Defined

Digital Currency

Obtaining Virtual Currency

Virtual Currency Mining

Purchasing Virtual Currency

Storing Virtual Currency

Storing Cryptocurrency in Cold Storage

Storing Cryptocurrency in Hot Storage

Virtual Currency Transactions

Confirmations

Security

Changes in Protocol — Forks

Airdrops

Blockchain

Summary

Chapter 1 Review Questions

Chapter 2 - Tax Treatment and Reporting

Learning Objectives

Introduction

Virtual Currency Transactions

Determining the Cost Basis of Virtual Currency

Cost Basis of Purchased Virtual Currency

Cost Basis of Virtual Currency Received for Goods or Services

Cost Basis of Inherited Virtual Currency

Virtual Currency Received as a Gift

Cost Basis Summary

Tax Treatment of Virtual Currency Received for Services

Virtual Currency Received as Wages

Virtual Currency Received by an Independent Contractor

Mining Virtual Currency

Tax Treatment of Virtual Currency Transactions

Exchanged Virtual Currency

Exchange of Virtual Currency for Other Property

Tax Treatment When Less Than All Virtual Currency Held Is Sold, Exchanged, or Disposed Of

Charitable Gifts of Virtual Currency

Tax Treatment of Protocol Changes

Reporting

Recordkeeping

Blockchain and the Distributed Ledger

Summary

Chapter 2 Review Questions

Glossary of Key Terms