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Reporting Traditional Income, paid to you in Virtual Currency *

Crypto-currency received in place of traditional currency for income related items is still income and must still be reported as such, even if you have not exchanged your cryptocurrency into USD. Receiving income in the form of cryptocurrency can complicate matters if not reported correctly. The receipt date and value of the "Income" helps determine the “Cost Basis” and “Purchase Date” of the altcoins. We still must report the income on your Sch C Self Employed Schedule, regardless of the cryto-currency's location or if sold. Each time this occurs, a separate transaction MUST BE reported.

For example:

Payout from Online Gaming Account:

$5k worth of gaming winnings was requested. You received 2.50 BTC instead of $5k on 12/15/16.

We will report $5k additional gross gaming winnings on your Sch C and record the "Buy" of 2.5 BTC on 12/15/16. 

If altcoins held, no capital gains or losses reported from this transaction... only reported when "Sell" occurs.

As you can see, the reciept of the "Income" determined the cost basis and purchase date of the BTC for future "Sell".

*This information does not constitute legal advice and you should not act upon the information provided above without obtaining specific advice from a qualified specialist. No representation or warranty is given as to the accuracy or completeness of the information provided above, and we do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on this information for any decision based on it without our knowledge.