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IRS Resolves Queries On Virtual Currency Question

On Oct 23, 2020, the IRS released instructions to the draft 2020 Form 1040 which contains the infamous virtual currency question ᠆᠆ At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in virtual currency? ᠆᠆ on the front page.

According to the newly released draft instructions, taxpayers aren’t required to check “yes” for the crypto question, if they only held cryptocurrency or transferred them between wallets they own during 2020. 

“A transaction involving virtual currency does not include the holding of virtual currency in a wallet or account, or the transfer of virtual currency from one wallet or account you own or control to another that you own or control” 

On Oct 23, 2020, the IRS released instructions to the draft 2020 Form 1040 which contains the infamous virtual currency question ᠆᠆ At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in virtual currency? ᠆᠆ on the front page.

According to the newly released draft instructions, taxpayers aren’t required to check “yes” for the crypto question, if they only held cryptocurrency or transferred them between wallets they own during 2020. 

“A transaction involving virtual currency does not include the holding of virtual currency in a wallet or account, or the transfer of virtual currency from one wallet or account you own or control to another that you own or control” 

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.