Are cryptocurrency purchases made in USD reportable to the IRS?

Many taxpayers have noticed a new question Form 1040 asking “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?†According to the IRS FAQ on cryptocurrency (Q5), as long as your only transactions involving cryptocurrency in 2020 were the purchases of virtual currency with real currency, you are not required to answer yes to the Form 1040 question.

As the popularity of cryptocurrency is on the rise, it is increasingly important for taxpayers to understand what their tax filing obligations are in relation to their cryptocurrency transactions. The IRS details the answer to this and many more frequently asked questions on their website at: FAQ on Virtual Currency Transactions

At Kaufman Accounting, we know how to reconcile crypto transactions generated in Kraken, Gemini, Coinbase, Bittrex and other exchanges. We have worked with may crypto currencies such as Bitcoin, SALT, ICN, Ether, EOS, BAT and many more. Contact us to help you ensure that your crypto transactions are reconciled and reported to the IRS to help ensure you stay in compliance.