Tax Treatment of Virtual Currency (Course Id 1981)

Taxes - Taxes for Course Id 1981

Virtual currency use is increasing, and roughly 3 in 10 Americans younger than age 30 indicate they have invested in, traded, or used a virtual currency, such as Bitcoin or Ethereum. As a result, tax preparers are more likely than ever to encounter clients who have engaged in one or more virtual currency transactions during the year and who may have taxable income as a result. Tax Treatment of Virtual Currency briefly discusses the nature of virtual currency, how transactions in virtual currency occur and are recorded, and the tax treatment to which they are subject.

NASBA QAS - Text - Technical - NASBA Registry - IRS Enrolled Agents - 1981

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; and
• 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; and
• Recognize how blockchain is employed with respect to virtual currency transactions.

Chapter 2
Tax Treatment of Virtual Currency

• 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; and
• 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 of Virtual Currency

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 Income, Gain or Loss

Summary

Chapter 2 Review Questions

Glossary