CFP Tax Planning & Compliance 2

Question 1

A fintech company classifies stablecoin redemptions as non-taxable return of principal. Under IRS guidance, this treatment is:

Accepted Answer

Incorrect, because any realized gain or loss on disposition of a stablecoin is a taxable event

Answer

The IRS treats virtual currency, including stablecoins, as property, so any disposal triggering a gain or loss is a taxable event regardless of the peg.

Question 2

Which US tax form must a fintech platform use to report payments of $600 or more made to freelancers via digital payment networks starting in 2024?

Accepted Answer

Form 1099-NEC

Answer

Form 1099-NEC is used to report nonemployee compensation of $600 or more paid to independent contractors.

Question 3

A DeFi protocol automatically converts one token to another in a liquidity pool rebalance. For a US taxpayer holding pool tokens, this swap is generally:

Accepted Answer

A taxable disposition that may trigger capital gains or losses

Answer

The IRS has clarified that crypto-to-crypto swaps are taxable dispositions, and like-kind exchange treatment under Section 1031 no longer applies to personal property after 2017.

Question 4

Under the Bank Secrecy Act, a fintech money services business must file a Currency Transaction Report (CTR) when a customer conducts a cash transaction exceeding:

Accepted Answer

$10,000

Answer

CTRs must be filed for cash transactions exceeding $10,000 in a single business day, as required by the Bank Secrecy Act.

Question 5

A US taxpayer receives 50 tokens as a reward for staking cryptocurrency. The correct tax treatment at receipt is to recognize:

Accepted Answer

Ordinary income equal to the fair market value of the tokens on the date received

Answer

Per Jarrett v. United States and subsequent IRS guidance, staking rewards are generally taxed as ordinary income at fair market value when received.

(CFP) Certified Fintech Practitioner Practice Test

(CFP) Certified Fintech Practitioner Practice Test

CFP Tax Planning & Compliance 2