Frequently Asked IRS Questions on Virtual Currency Transactions
In 2014, the IRS issued Notice 2014-21, 2014-16 I.R.B. 938, explaining that virtual currency is treated as property for Federal income tax purposes and providing examples of how longstanding tax principles applicable to transactions involving property apply to virtual currency. The frequently asked questions (“FAQs”) below expand upon the examples provided in Notice 2014-21 and apply those same longstanding tax principles to additional situations.
Comments on these FAQs may be submitted electronically via email to Notice.Comments@irscounsel.treas.gov. The email should include “FAQs on Virtual Currency” in the subject line. All comments submitted by the public will be available for public inspection and copying in their entirety.
Note: Except as otherwise noted, these FAQs apply only to taxpayers who hold virtual currency as a capital asset. For more information on the definition of a capital asset, examples of what is and is not a capital asset, and the tax treatment of property transactions generally, see Publication 544, Sales and Other Dispositions of Assets.