As virtual currencies gain more traction in the marketplace, the IRS is taking notice. Your clients may be unaware of the tax reporting requirements and the tax implications from their cryptocurrency transactions.

In this Tax Section Odyssey episode, April Walker, CPA, CGMA, Lead Manager — Tax Practice & Ethics, Association of International Certified Professional Accountants, representing AICPA & CIMA, and Shehan Chandrasekera, CPA, Head of Tax Strategy — CoinTracker, delve into the cryptic world of virtual currency and discuss practical tax compliance tips.

What you'll learn in this episode

• History and the basics of cryptocurrency (1.01)
• Advantages and benefits of owning and transacting with cryptocurrency (2.39)
• Non-fungible tokens (NFTs) (4.18)
• The taxation of cryptocurrency and IRS guidance (5.56)
• Advice to clients regarding cryptocurrency activity and transaction tracking (8.39)
• How to answer the virtual currency question on the Form 1040 (10.53)
• Potential tax legislation and virtual currency (13.01)
• What to do when a client receives an IRS letter or notice regarding virtual currency activity (15.07)
• Journal of Accountancy podcast episode that focuses on the recent annual tax software survey (18.43)

AICPA resources

• Virtual currency tax guidance and resources — Consolidation of AICPA resources, comment letters and IRS guidance to help tax practitioners advise clients on cryptocurrency complexities
• Blockchain & Digital Assets — Hub of resources around this increasingly-common technology

Other resources

• Coinmarketcap.com — Website consolidating the various cryptocurrency properties and current prices
• IRS Notice 2014-21 —IRS guidance for individuals and businesses on the tax treatment of transactions using virtual currencies
• Rul. 2019-24 — IRS guidance that addresses common questions by taxpayers and tax practitioners regarding the tax treatment of a cryptocurrency hard fork
• The IRS also published Frequently Asked Questions on Virtual Currency Transactions for individuals who hold cryptocurrency as a capital asset and are not engaged in the trade or business of selling cryptocurrency
• CoinTracker — Software to help track cryptocurrency investment performance and taxes.
• Lukka — Data and software solutions to manage crypto assets on infrastructure built for the future of commerce. In December 2019, CPA.com announced a strategic alliance with Lukka to deliver crypto asset solutions to firms.
• IRS Cryptocurrency Tax Letter Guide: 6173, 6174, 6174-A, CP-2000 — Step-by-step guide to help taxpayers know what to do if they receive a cryptocurrency-related letter from the IRS
• Tax software: What CPAs like and dislike — Journal of Accountancy podcast where editors Alistair Nevius and Paul Bonner discuss details of the annual tax software survey.

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This episode is brought to you by the AICPA's Tax Section, your home base to maintain your professional edge. To learn more about the Tax Section, check out aicpa.org/tax or sign up for a free web tour.