SECTION 4. FREQUENTLY ASKED
Internal Revenue Bulletin 2014-16 · 2026-10-03 edition · updated 2026-10-04 · United States
QUESTIONS
Q–1: How is virtual currency treated for federal tax purposes?
A–1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.
Q–2: Is virtual currency treated as currency for purposes of determining whether a transaction results in foreign currency gain or loss under U.S. federal tax laws?
A–2: No. Under currently applicable law, virtual currency is not treated as currency that could generate foreign currency gain or loss for U.S. federal tax purposes.
Q–3: Must a taxpayer who receives virtual currency as payment for goods or services include in computing gross income the fair market value of the vir- tual currency?
A–3: Yes. A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received. See Publication 525, Taxable and Nontaxable Income, for more information on miscellaneous income from exchanges involving property or services.
Q–4: What is the basis of virtual currency received as payment for goods or services in Q&A–3?
A–4: The basis of virtual currency that a taxpayer receives as payment for goods or services in Q&A–3 is the fair market value of the virtual currency in U.S. dollars as of the date of receipt. See Publication 551, Basis of Assets, for more information on the computation of basis when property is received for goods or services.
Q–5: How is the fair market value of virtual currency determined?
A–5: For U.S. tax purposes, transactions using virtual currency must be reported in U.S. dollars. Therefore, taxpayers will be required to determine the fair
or claim should also include the other information requested in § 1.165–11(e).
This notice is limited to making an election under § 165(i) and does not affect the application of any other section of the Code or the regulations.
DRAFTING INFORMATION
The principal author of this notice is Daniel A. Cassano of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this notice contact Mr. Cassano on (202) 317-7011 (not a toll-free number).
IRS Virtual Currency Guidance
Notice 2014–21
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