The IRS has issued Form 1040 for 2020, which incorporates the question of whether or not a taxpayer has invested in cryptocurrencies at the top of the first line. The question first appeared in 2019.
Crypto as Property
The query “At any point during 2020 you had any financial interest in virtual currency earned, sold, sent, transferred, or otherwise acquired,” is the same language that has been used since 2019.
Cryptocurrency is considered property with regards to the IRS. Therefore, it is taxable. To declare cryptocurrency on taxes, the fair market value of a taxpayer must be calculated at the date of sale.
Regulatory Effects on Crypto’s Growth
Cryptocurrency is considered more volatile than regular currency. Reactions are mixed, but many in the cryptocurrency community believe this can lend to the legitimacy of virtual currency as a whole.
