Crypto Trading Portfolio Management and Tax Reporting 2

Question 1

How long must you hold a cryptocurrency to qualify for long-term capital gains tax rates in the US?

Accepted Answer

More than 1 year

Answer

More than 6 months

Answer

More than 2 years

Answer

More than 18 months

Question 2

When you pay for goods or services using Bitcoin, what tax event occurs?

Accepted Answer

A capital gain or loss is recognized based on BTC's value at the time of payment vs. your cost basis

Answer

No taxable event occurs since it is a currency

Answer

Only the merchant owes taxes on the transaction

Answer

A taxable event only occurs if the purchase exceeds $600

Question 3

What is 'tax-loss harvesting' in crypto portfolio management?

Accepted Answer

Selling losing positions to realize losses that offset capital gains

Answer

Donating crypto to charity to avoid taxes

Answer

Moving crypto to a tax-free jurisdiction

Answer

Staking coins to generate tax-deductible expenses

Question 4

Which of the following crypto events does NOT create a taxable event in the US?

Accepted Answer

Transferring crypto between your own wallets

Answer

Trading BTC for ETH

Answer

Selling crypto for USD

Answer

Receiving crypto as payment for freelance work

Question 5

What is the annual capital loss deduction limit against ordinary income for US individual taxpayers after offsetting capital gains?

Accepted Answer

$3,000

Answer

$1,000

Answer

$5,000

Answer

Unlimited

Question 6

In portfolio management, what does 'dollar-cost averaging' (DCA) help a crypto investor achieve?

Accepted Answer

Reduced average purchase cost by investing fixed amounts at regular intervals

Answer

Maximum profit by timing market peaks

Answer

Zero tax liability through systematic purchases

Answer

Guaranteed above-market returns

Question 7

Receiving staking rewards in the US is generally considered what type of income by the IRS?

Accepted Answer

Ordinary income at the fair market value when received

Answer

Capital gains income

Answer

Tax-free passive income

Answer

Return of capital with no immediate tax owed