The IRS and other agencies are expanding their efforts to enforce reporting compliance for taxpayers who transact in virtual currency.

For purposes of reporting the information on you tax return, a transaction involving virtual currency includes:

• The receipt or transfer of virtual currency for free (without providing any consideration), including from what the IRS defines as an airdrop;
• An exchange of virtual currency for goods or services;
• A sale of virtual currency;
• An exchange of virtual currency for other property, including for another virtual currency; and
• A disposition of a financial interest in virtual currency.

This is an evolving subject and we are hoping for more clarification from the government before tax filing season in 2022. If you have any questions in the mean time, please don’t hesitate to contact your tax professional.