It’s 01/01/18 how would I go about reporting a bitcoin purchase. Do I report anything if I don’t sell it this year? If I do sell it how do I report it?

[rrey0456]

It’s 01/01/18 and I have never purchased Bitcoin. I would like to invest soon but want to know the tax implications and what would be needed from me come tax season. I don’t want to risk an audit just because I didn’t know how to report an investment into bitcoin, properly. Any help or advise would be greatly appreciate.

Thank you 

[Opus 17]

Bitcoin is treated like any other asset, stock or collectible.  There are no tax issues when buying.  When you sell, you have either a capital gain or loss, that is taxed as regular income (short term gain, held one year or less) or lower long term capital gains rates (held more than 1 year.)  Because cryptocurrency exchanges are not currently required to issue 1099-B statements like a stock broker does, you will need your own accurate records of your purchases and sales.  If you are audited and can't prove the price you paid, the IRS is likely to declare the entire amount to be a taxable gain.

See these previous questions and answers for more.  

https://ttlc.intuit.com/questions/4147031-how-will-turbox-tax-ask-me-about-selling-crypto-currency

https://ttlc.intuit.com/questions/4147084-how-will-the-irs-know-you-sold-crypto-currency

https://turbotax.intuit.com/tax-tips/tax-payments/tax-tips-for-bitcoin-and-virtual-currency/L1ZOgU00...

[mjkst27]

I bought and sold GBTC (Grayscale Bitcoin Trust) ONLY in a Roth IRA account and a Traditional IRA account in 2020.  I had no other crypto related activity. Should I check "yes" for the "virtual currency" question?