The United States Internal Revenue Service (IRS) has updated its FAQ section on cryptocurrency. It explains that an investor who has only purchased crypto assets with fiat currency is not required to report the transaction(s) under the “virtual currency” question. The first page of the U.S. citizens’ Individual Income Tax Return form asks whether the respondent received, sold, sent, exchanged, or otherwise acquired “any financial interest in any virtual currency” during 2020. The updated FAQ clarifies that if a taxpayer’s only transactions involving virtual currency during 2020 were purchases of virtual currency with real currency, the taxpayer is not required to answer yes to the aforesaid question in the form. The new FAQ section suggests crypto investors do not need to report these transactions provided they exclusively purchased cryptocurrency for U.S. dollars and did not make crypto-to-crypto trades or sell any of their digital assets for fiat. Conversely, if they purchased crypto with other crypto assets, or sold any of their cryptocurrency during 2020, the transactions must be reported.

https://cointelegraph.com/news/irs-clarifies-reporting-requirements-for-crypto-bought-with-fiat

CH-019064 (Webpage Portal)
2021-03-04 (Published)
2021-07-29 (Updated)