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Virtual Currency and Form 1040, Schedule 1

November 11, 2019

As part of the IRS effort to make taxpayers aware of the possible tax consequences involving virtual currency, the following question has been added to the top of Form 1040, Schedule 1:

  • At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?

The taxpayer should answer this question either Yes or No. The Schedule 1 does not need to be filed if the answer to this question is NO and they do not have to file Schedule 1 for any other purpose.

The IRS has also issued the following additional detailed guidance to help taxpayers better understand their reporting obligations for specific transactions involving virtual currency:

  • Revenue Ruling 2019-24
    Addresses two questions related to if a taxpayer has income in two virtual currency scenarios.
  • Frequently Asked Questions (FAQs) on Virtual Currency Transactions
    Covers 43 common questions such as:
      • What is virtual and cryptocurrency
      • How virtual currency is treated for federal income tax purposes
      • When does a virtual currency transaction result in a capital transaction
      • Whether a virtual currency transaction is deemed an exchange, wages or a distribution
      • How is gain or loss determined on virtual currency transactions

The new guidance supplements the guidance the IRS issued on virtual currency in Notice 2014-21.

See the following for more information:

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