• On the 2021 1040 Draft Form, the IRS modifies the crypto question language

  • The Internal Revenue Service of the United States may be on the verge of clarifying how crypto-assets should be taxed.

    The tax office recommended asking the question “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?” in a draft edition of the 1040 form posted on Wednesday.

    In contrast, the longer 2020 question questioned, “Did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency at any time during 2020?”

    In the 2020 version of the issue, it was unclear whether just purchasing bitcoin or moving it from one wallet to another would result in taxation.

    The IRS clarified last year that cryptocurrency transactions are taxable only if they are sold, exchanged for goods or services, or exchanged for property, such as other crypto assets.

    If accepted, the new language would make it much apparent which kind of transactions the IRS is considering.

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