CCA Cryptocurrency Taxation & Accounting

Question 1

How does the IRS classify cryptocurrency for federal tax purposes in the United States?

Accepted Answer

As property

Answer

The IRS classifies cryptocurrency as property under Notice 2014-21, meaning general tax principles applicable to property transactions apply.

Question 2

What type of income is recognized when cryptocurrency is received as payment for goods or services?

Accepted Answer

Ordinary income

Answer

Cryptocurrency received as payment for goods or services is treated as ordinary income equal to its fair market value at the time of receipt.

Question 3

Which cost basis accounting method allows taxpayers to minimize capital gains by designating specific lots of cryptocurrency to sell?

Accepted Answer

Specific identification

Answer

Specific identification allows taxpayers to designate exactly which units of cryptocurrency are being sold, giving maximum control over taxable gain calculations.

Question 4

Which of the following events does NOT trigger a taxable event for cryptocurrency?

Accepted Answer

Transferring cryptocurrency between your own wallets

Answer

Transferring cryptocurrency between wallets you own is not a taxable event because there is no change in ownership or realization of gain.

Question 5

What is the minimum holding period required for cryptocurrency gains to qualify as long-term capital gains in the US?

Accepted Answer

More than 1 year

Answer

Cryptocurrency held for more than one year qualifies for long-term capital gains tax rates, which are generally lower than ordinary income rates.

(CCA) Certified Cryptocurrency Auditor Practice Test

(CCA) Certified Cryptocurrency Auditor Practice Test

CCA Cryptocurrency Taxation & Accounting