Do I need to report cryptocurrencies I bought this year on Coinbase? I've traded cash->crypto but no crypto->crypto or crypto->cash. The bitcoin and bitcoin cash split?

[maglib · Accepted solution]

Cryptocurrency is considered property by the IRS and every move within the tax year is a recordable transaction.  Only Cryptocurrency held for investment has a gain/loss. Cryptocurrency for personal property is only gains, no losses (so for purchases of goods and services, there is only gains, no losses as they are personal).

To reports gains/losses allowed (NOT FOR MINERS, miners  report as self employed on schedule C and the cryptoccy for them is as if they produced and sold inventory, they recognize income on mining and on the sale and the related expenses) . Non-miners  go to "Personal", "Investment Income",  "Stocks, Mutual Funds, Bonds, Other", and record each transaction with the date you sold the coins, for how much, when you acquired them, and for what.  Choose Other as the category.  You can't take a loss on personal items (if you used cryptoccy to purchase goods and services) which you report those under Other/personal items/other. Cryptocurrency for investment purposes is recorded as Everything Else. Make sure only personal use cryptocurrency is recorded in the personal Items section.

https://www.irs.gov/pub/irs-pdf/p544.pdf and  https://www.irs.gov/pub/irs-pdf/i8949.pdf  are the IRS rules for property and reporting.  Personal property net losses are not deductible but investment property is....  follow the IRS guidelines for property.

IRS guidance on cryptocurrency as property:

https://www.irs.gov/newsroom/irs-virtual-currency-guidance 

https://www.irs.gov/pub/irs-drop/n-14-21.pdf 

I hope this was helpful?

[pavs]

Thank you! One follow-up verification, I wrote a "Property Description" but entered no information in "Net Proceeds" and "Date of Sale." I acquired the property via "Purchase" and filled out "Cost or Other Basis" and "Date of Purchase." If I still have this investment and have not sold it, what is my holding period? Because, again, I have not sold it.

[maglib]

As long as you have not moved it in or out of an exchange nor purchsed goods with it nor sold it, you have nothing to report.

[pavs]

I did move it "in" as in purchased the cryptocurrencies in 2017.

[maglib]

Only moves after the initial purchase are gains/losses reported. So let's say you used the crypto to buy a house in the market and from the date of purchase of the crypto to the date of purchase of the home, If you paid $100 and now it's worth $1,000, you would have a personal gain on the purchase of the $900. If in these days the value dropped and it's worth $10, it's a personal loss of $90 and non-deductible. If you bought the shares as an investment though and exchanged the crypto you bought at $100 for new type or moved it to another exchange you have a reportable LT or ST gain or loss.

[pavs]

Okay, thank you very much for the explanation!

[rickwm60]

I only buy and hold! I do not trade or purchase anything with my cryptocurrency. I was told I need to mark yes in the box about cryptocurrency. Not sure I did that.

[MarilynG1]

@rickwm60  You'll need to report your cryptocurrency if you sold, exchanged, spent or converted it.

If this doesn't apply to you, you don't need to report anything in on your tax return.

Click this link for more info on Reporting Crypto Transactions.