The IRS now requires that all individuals answer this question about cryptocurrency on the first page of their personal tax returns: At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?   According to the Form 1040 instructions:

If, in 2021, you engaged in any transaction involving virtual currency, check the “Yes” box next to the question on virtual currency on page 1 of Form 1040 or 1040-SR. A transaction involving virtual currency includes, but is not limited to:

  • The receipt of virtual currency as payment for goods or services provided
  • The receipt or transfer of virtual currency for free (without providing any consideration) that does not qualify as a bona fide gift
  • The receipt of new virtual currency as a result of mining and staking activities
  • The receipt of virtual currency as a result of a hard fork
  • An exchange of virtual currency for property, goods, or services
  • An exchange/trade of virtual currency for another virtual currency
  • A sale of virtual currency
  • Any other disposition of a financial interest in virtual currency.

Due to this reporting requirement, we now ask each of my clients during our tax prep meeting whether during the year they purchased, sold, or otherwise acquired any virtual currency, including bitcoin. The response we get is usually one of the following three questions:

  • Have you?
  • Should I?
  • How can I invest in something I don’t understand?

To learn more about Cryptocurrency, check out Alex Oliver’s recorded Webinar available at:

In his webinar, Alex addresses that a diversified portfolio has long included various types of assets that range from large, mid-sized, and small companies, to value versus growth-oriented businesses, to various sectors within the economy, fixed income, commodities, and much more. With the total market capitalization of cryptocurrencies rising from $1 trillion to $3 trillion in 2021, is it time to add crypto assets to your IRAs, Roth IRAs, and investment accounts? If so, what percentage of your portfolio is appropriate? Which avenues are the best ways to invest? Join Alex Oliver in a quickly evolving discussion around one of the hottest topics in the investing world.