Tax Treatment of Virtual Currency

Tax Treatment of Virtual Currency

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.

After completing this course, students should be able to:

  • 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.