Christian Posted September 5, 2022 Report Share Posted September 5, 2022 I note some questions in the press about the IRS question about digital currencies which is now on the Form 1040. I have a client who purchased some Bitcoin in 2021 and is simply holding it as an investment. I answered no to the question as it's phrasing seemed odd and have since read pros and cons as to the correct response. If memory serves it asked if you received ( as in a gift or being paid in Bitcoin) and since he purchased it I thought no would be correct. What is your opinion? I see they are going to rephrase it again for the 2023 filing season. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted September 5, 2022 Report Share Posted September 5, 2022 No is correct if you only bought cryptocurrency with fiat currency. https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions Q5. The 2020 Form 1040 asks whether at any time during 2020, I received, sold, sent, exchanged, or otherwise acquired any financial interest in any virtual currency. During 2020, I purchased virtual currency with real currency and had no other virtual currency transactions during the year. Must I answer yes to the Form 1040 question? (updated March 2, 2021) A5. No. If your only transactions involving virtual currency during 2020 were purchases of virtual currency with real currency, you are not required to answer yes to the Form 1040 question. 3 Quote Link to comment Share on other sites More sharing options...
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