CCA Cryptocurrency Taxation & Accounting 3

Question 1

Per IRS Revenue Ruling 2019-24, how are tokens received from a cryptocurrency hard fork treated for US tax purposes?

Accepted Answer

As ordinary income at fair market value when received

Answer

As a tax-free reorganization

Answer

As a long-term capital gain

Answer

Not taxable until the tokens are sold

Question 2

How does the wash sale rule (IRC Section 1091) currently apply to cryptocurrency in the United States?

Accepted Answer

It does not currently apply to cryptocurrency as it only covers securities

Answer

It fully applies and prevents deducting losses if crypto is repurchased within 30 days

Answer

It applies only to crypto held on registered centralized exchanges

Answer

It applies only to cryptocurrency held for over one year

Question 3

When is an airdrop of a new cryptocurrency token generally taxable to a US recipient?

Accepted Answer

When the taxpayer receives the tokens and has dominion and control over them

Answer

Only when the tokens are subsequently sold

Answer

Never — airdrops are treated as non-taxable gifts

Answer

Only if the airdrop exceeds $10,000 in fair market value

Question 4

Under the Infrastructure Investment and Jobs Act of 2021, what new reporting requirement was imposed on cryptocurrency brokers in the US?

Accepted Answer

Issuance of Form 1099-DA reporting crypto sales to customers and the IRS

Answer

Monthly reporting of all wallet balances to the IRS

Answer

Mandatory escrow of all user funds

Answer

Quarterly audit submissions to the SEC

Question 5

Under FinCEN regulations, cryptocurrency exchanges operating as Money Services Businesses (MSBs) must file which report for suspicious transactions?

Accepted Answer

Suspicious Activity Report (SAR)

Answer

Form 8300

Answer

Currency Transaction Report (CTR)

Answer

Foreign Bank Account Report (FBAR)

Question 6

What records should a cryptocurrency investor maintain to ensure proper tax compliance?

Accepted Answer

Date of acquisition, cost basis, fair market value at disposal, transaction fees, and purpose of each transaction

Answer

Only annual transaction summaries from the exchange

Answer

Only records for transactions exceeding $10,000

Answer

Blockchain wallet addresses only

Question 7

Which tax strategy involves selling cryptocurrency at a loss to offset capital gains and then immediately repurchasing the same asset?

Accepted Answer

Tax loss harvesting

Answer

Tax arbitrage

Answer

Tax deferral

Answer

Step-up in basis