Yes or No Question for virtual currency transaction for 2021

Forum|Forum|3 years ago
August 23, 2022
2 replies
19 views

I purchased ATOM with US Dollar $ . I didn't sell, just holding but it seems I received rewards by staking.

* My answer to the IRS question is still " NO " , right?

* Do I have to report the rewards I received as income? If so, where should I report?

Thank you so much!

Mike9241

Level 15

How is staking taxed?

The IRS has not issued explicit guidance on how staking is taxed. However, most tax experts agree that rewards will be taxed as income at the time of the receipt based on previous IRS guidance on mining taxes.

this would go on schedule 1 line 8Z

Mike9241

NCperson

Level 15

@Kiki if ATOM is a virtual currency, your answer to the question is 'yes'.

the question asks if you had a transaction - and a 'transaction' is a "buy' or a 'sell'.

you state your PURCHASED ATOM, so that is a transaction.

KikiAuthor

Level 5

Thank you for your reply. So, should I answer YES?

I am still confused. Below is what the IRS says in Frequently asked Question. I would appreciate any advice. I just don't want to make any mistake that may lead to so much headache later.

Q5(a). The 2021 Form 1040 asks whether at any time during 2021, I received, sold, exchanged, or otherwise disposed of any financial interest in any virtual currency. During 2021, I purchased virtual currency with real currency and had no other virtual currency transactions during the year. How do I answer the question on the Form 1040? (added March 10, 2022)

A5(a). If your only transactions involving virtual currency during 2021 were purchases of virtual currency with real currency, you are not required to answer “yes” to the Form 1040 question, and should, instead, check the “no” box.