Virtual Currency Transactions and Form 1040 (Course Id 2243)

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/

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