Cryptocurrency Questions & Answers!

<p>The IRS’ take on Cryptocurrency, or as the Service calls it, "Virtual Currency" is becoming more and more essential to investing and holding the&nbsp;</p> <p>assets. Why? Virtual currency transactions are taxable by law just like transactions in any other property. Taxpayers transacting in virtual currency&nbsp;</p> <p>may have to report those</p> <p>transactions on their tax returns. WHAT IS VIRTUAL CURRENCY? &nbsp;Virtual currency is a digital representation of value that</p> <p>functions as a medium of exchange, a unit of account, and/or a store of value. In some environments, it operates</p> <p>like “real” currency (i.e., the coin and paper money of the United States or of any other country that is designated as</p> <p>legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of</p> <p>issuance), but it does not have legal tender status in the U.S. Cryptocurrency is a type of virtual currency that</p> <p>utilizes cryptography to validate and secure transactions that are digitally recorded on a distributed ledger, such as</p> <p>a blockchain.</p> <p>Virtual currency that has an equivalent value in real currency, or that acts as a substitute for real currency, is</p> <p>referred to as “convertible” virtual currency. Bitcoin is one example of a convertible virtual currency. Bitcoin can be</p> <p>digitally traded between users and can be purchased for, or exchanged into, U.S. dollars, Euros, and other assets.</p> <p><br></p> <p><br></p>