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AICPA Wants 1040 Crypto Clarification

Cryptocurrency anotherThe American Institute of CPAs has asked the Internal Revenue Service to revise the virtual currency question on the 2021 Form 1040. Among recommendations made by the organization was for clarification of the meaning of virtual currency.

That includes modifying the definition of virtual currency in the first paragraph of 1040 instructions to make it consistent with the definition in Rev. Rul 2019-24 and Notice 2014-21. The AICPA said instructions should state virtual currency refers only to convertible virtual currency and to provide examples.

The AICPA asked whether terms “unit of account,” “store of value” and medium of exchange” must all be present or if just one must be present and to have the form provide definitions of each term.

Another recommendation was that reference to assets with the “characteristics of virtual currency” should be removed from the form as that is not part of the IRS’ official and binding guidance. Additionally, there should be no mention of digital assets until the term has beem defined in final regulations under Section 6045.

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