Cryptocurrency taxation is a new thing. There is lots of opinion on it and lots of speculation around it and whether or not the IRS actually know about your crypto activity. Whether you agree or disagree with tax on crypto you need to answer this new question truthfully. 

So "At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?"
YES – if you made any kind of cryptocurrency disposal or bought or received any cryptocurrency
​NO - pretty much only applies to no-coiners!

Any capital gains and income from cryptocurrency should be reported on your tax return, so such activity is clear for the IRS to see and the answer to The Crypto Question is obviously Yes. 

However, for those whose activity has no taxable liability the question is confusing. If this applies to you, (for example if you have bought, been gifted or held but have not disposed of crypto) you still have a financial interest and that cryptocurrency may be taxable in the future so you must answer YES. 

This simply informs the IRS of your status and that you recognize that you may owe tax in future. If you wish you can disclose more information by attaching a statement or a Form 8275. It is not a necessity but the IRS may ask you to explain your situation, so it could be worthwhile just in case. 

Being honest about your crypto holdings shows the IRS that you are proactive about tax and could help you to avoid audits or penalties in the future. 

Disclaimer: This article is intended as an informative piece. This is not accounting or tax advice. Please speak to a qualified tax professional about your specific circumstances before acting upon any of the information in this article. 

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