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The IRS Will Ask Every Taxpayer About Crypto Transactions This Tax Season — Here’s How To Report Them

Posted on by Phil Lam X

Cryptocurrencies, also known as virtual currencies, have gone mainstream. That’s for sure. For example, you can use bitcoin BTCUSD, -0.35% to buy a Tesla TSLA, +1.75% and to buy or pay for lots of other things. However, using cryptocurrencies has federal income tax implications. Here’s what you need to know at 2021 tax return time if you made crypto transactions last year.

Understand this: the IRS wants to know about your crypto transactions
The 2021 version of IRS Form 1040 asks if at any time during the year you received, sold, exchanged, or otherwise disposed of any financial interest in any virtual currency. If you did, you are supposed to check the “Yes” box. The fact that this question appears on page 1 of Form 1040, right below the lines for supplying basic information like your name and address, indicates that the IRS is serious about enforcing compliance with the applicable tax rules. Fair warning.

When to check the ‘Yes’ box on crypto transactions
The 2021 Form 1040 instructions clarify that virtual currency transactions for which you should check the “Yes” box include but are not limited to: (1) the receipt of virtual currency as payment for goods or services that you provided; (2) the receipt or transfer of virtual currency for free that does not qualify as a bona fide gift under the federal tax rules; (3) the receipt of new virtual currency as a result of mining and staking activities; (4) the receipt of virtual currency as a result of a hard fork; (5) an exchange of virtual currency for property, goods, or services; (6) an exchange/trade of virtual currency for another virtual currency; (7) a sale of virtual currency; and (8) any other disposition of a financial interest in virtual currency.

If in 2021 you disposed of any virtual currency that was held as a capital asset through a sale, exchange, or transfer, check the “Yes” box and use familiar IRS Form 8949 and Schedule D of Form 1040 to figure your capital gain or loss. See Examples 1 and 4 below.

If in 2021 you received any virtual currency as compensation for services, check the “Yes” box and report the income the same way as you would report other income of the same nature. See Example 3 below.

When to check the ‘No’ box on crypto transactions
You cannot leave the virtual currency transaction question unanswered. You must check either the “Yes” box or the “No” box.

A transaction involving virtual currency does not include holding virtual currency in a wallet or account, or the transfer of virtual currency from one wallet or account that you own or control to another that you own or control. If that’s all that happened last year, check the “No” box.

Also check the “No” box if your only virtual currency transactions in 2021 were purchases of virtual currency for real currency, including the use of real currency electronic platforms such as PayPal PYPL, -1.43%.

Source: MarketWatch

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Dogecoin Mining Scam In Turkey Costs 1,500 People $119M As Alleged Perpetrator Vanishes Into Thin Air

Posted on by Phil Lam X

An alleged scammer has gone missing in Turkey with 350 million Dogecoin valued at nearly $119.14 million, as per local media reports.

What Happened: Turgut V. organized one-on-one meetings and promoted “Dogecoin mining” at luxurious venues in order to lure investors and build relationships with them, reported Interesting Engineering, citing Turkey’s TV100.

Post the meetings, Turgut V. gathered the investors on a Telegram channel and got them to transfer DOGE to the allegedly fraudulent scheme.

An investor told TV100 that they were promised 100% returns in 40 days.

At press time, DOGE traded 0.71% higher at $0.29 over 24 hours.

Why It Matters: Reportedly 1,500 people made transfers to Turgut V.’s operations in the course of three months on the promise of regular dividends before they were abruptly shut down.

Istanbul’s Küçükçekmece Chief Public Prosecutor’s Office has launched an investigation into the incident and banned Turgut V. from leaving Turkey.

As per TV 100, 11 other suspects are also under investigation, which includes the romantic partner of Turgut V. 

Dogecoin, often discussed by Tesla Inc CEO Elon Musk, has captured the imaginations of many retail investors, a fact not unnoticed by scam artists.

Source: Benzinga

Apple and Tesla are doing stock splits. Here’s what that actually means to investors

Posted on by Phil Lam X

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When a company splits its stock, its total value doesn’t change; it just ends up with more stocks, each at a cheaper cost.

Here’s a food metaphor: If you ask the guy at the pizzeria to cut each slice in your large pie in half, you’ll still go home with the same amount of pizza. You just have more, smaller slices now.

Companies typically say they’re splitting their stocks to make them affordable to more people.

But, is that reality? It’s more of a way to grab headlines and bring in money, said certified financial planner Douglas Boneparth, founder and president of Bone Fide Wealth in New York.

“This was done as a marketing tool to get smaller investors to invest in the stock,” Boneparth said. “The actual mechanics of the company are the same.”

And therefore, so are your chances of making a profit on either Tesla or Apple, experts say.

“People ultimately want to know, ‘What does this mean for my bottom line?’” Boneparth said. “The answer is: nothing.”

If you own Apple in an index fund, for example, it’s as if you had a dollar that just turned into four quarters, Boneparth said.

Source: CNBC