I then converted my Ethereum to Bitcoin in 2024.
IRS Q64 here states:
If you exchange digital assets for other property, including for other digital assets differing materially in kind or extent or debt instruments issued as a part of the transaction, you will recognize a capital gain or loss. For more information on calculating gain or loss from disposing of digital assets for other property, including other digital assets, see FAQs 65 through 67.
The purchases of Bitcoin and Ethereum in 2021 are not taxable events. However, the purchases will establish the cost basis for each of the investments.
IRS Q56 here states:
If you purchase digital assets using cash in a transaction your basis in the digital assets received includes the amount you paid in cash for the digital assets plus the amount you paid for transaction services to effect the purchase, the latter of which are digital asset transaction costs. For more information on which types of costs qualify as digital asset transaction costs, see FAQ 53.
The 2024 transaction would be reported on your 2024 Federal income tax return. The entry would be reported on an amended income tax return.
If you used TurboTax Online, log in to your account that contains your 2024 income tax return and select Amend a return that was filed and accepted. See this TurboTax Help.
The transaction would be reported under Investments and Savings and Stocks, Cryptocurrency, Mutual Funds, Bonds, Other as a manually entered IRS form 1099-B. Please post if you have further questions.
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