Part 1 of our discussion about Cryptocurrency and Taxes started with the question that appeared for the first time on the 2019 tax return, which reads:
“At any time during the tax year, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency.”
A response of “yes” to this question usually means you’ve triggered a taxable event from your virtual currency transactions, which must be reported on your tax return.
Virtual currency is a digital representation of value. You can access it digitally and spend it at a variety of places. Virtual currency operates like “real currency” except it does not have legal tender status in the United States. For tax purposes, we refer to convertible virtual currencies, which means they can be converted in and out of US Dollars. Non convertible virtual currencies such as those that are purchased to play games on your phone, computer, or gaming console can only be used within the gaming system and can’t be converted back to US dollars. These non-convertible virtual currencies are not the subject of our discussion.
Cryptocurrency is a type of virtual currency. It uses cryptography to record secure transactions digitally on a distributed ledger such as blockchain. Bitcoin, Ethereum, Litecoin, and Ripple are popular types of cryptocurrencies. The use case for crypto has expanded and evolved to an eco-system since Bitcoin first launched in 2009.
Entering the cryptocurrency eco system may feel like jumping into a game of double dutch jump rope. As a jumper, how do you know when to jump in? Once you’re in, how do keep jumping without stepping on and stopping the ropes from turning? Learning about cryptocurrency is one step into the crypto journey.
Here’s part 2, the remainder of the conversation, with John Wingate, CEO at BankSocial™ and crypto expert. We discuss the growing popularity of decentralized finance, DeFi, and its impact on banking and financial systems as we know them. John ends the conversation by providing tips to begin your journey into cryptocurrency.
BankSocial™ is the first and only Decentralized Banking and Finance Platform, built 100% from the ground up on the Blockchain, that pays the banks members for holding tokens to fund loans.
Website: https://www.banksocial.io
Email: john@banksocial.io
LinkedIn: https://www.linkedin.com/company/banksocial
FB: https://bit.ly/3ffSL4K
Twitter: https://twitter.com/banksocialio
YouTube: https://youtube.com/BankSocial
IG: https://www.instagram.com/banksocial.io
Thank you for listening.
As with any tax issue, contact your tax professional to help you navigate your own unique situation.
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