Manning & Assoc



WHAT IS CRYPTOCURRENCYOn October 31, 2008, a person or persons calling themselves Satoshi Nakamoto published a white paper called “Bitcoin: A Peer-to-Peer Electronic Cash System.”This report outlined a system for creating a new digital currency to make electronic payments directly from one individual to another without the involvement of an intermediary, like a bank. On January 3, 2009, Satoshi put the system into practice… creating 50 units of his new currency, bitcoin. Bitcoin was created as an alternative to a banking system that failed miserably during the financial crisis. Satoshi saw the carnage bankers had wrought throughout the global financial system and wanted to create an alternative.Bitcoin – the first decentralized digital currency – is Satoshi’s revenge on the global financial system.It is a digital “coin” (or “cryptocurrency”) that you can send over the Internet to pay for things. Its existence is solely in the form of computer code that is so secure, it is virtually impossible to hack….It isn’t controlled by any one person or central authority. It operates over a vast network of thousands of computers owned by unrelated individuals all over the world. The network is secured by more than 10,000 specialized computers in more than 100 countries…making it literally the most powerful computing network on the planet. (If you want to get more technical than this, go to .) There are thousands of digital currencies, but bitcoin is by far the largest.INTERNAL REVENUE SERVICEIRS refers to cryptocurrency as virtual currency.TAX CONSEQUENCESThe sale or other exchange of virtual currencies, or the use of virtual currencies to pay for goods or services, or holding virtual currencies as an investment, generally has tax consequences that could result in tax liabilityThe IRS issued IRS Notice 2014-21, IRB 2014-16, as guidance for individuals and businesses on the tax treatment of transactions using virtual currencies.PLEASE NOTE STARTING WITH THE 2019 INDIVIDUAL TAX RETURN FORM 1040 REQUIRES AN ANSWER YES OR NO. At any time during 2019, did you receive, sell, exchange, or otherwise acquire any financial interest in any virtual currency? ................
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