SECTION 1. PURPOSE

Notice 2014-21, 2014-16 I.R.B. 938, provides that convertible virtual currency is treated as property for federal tax purposes and that general tax principles applicable to property transactions apply to transactions using convertible virtual currency. This Notice modifies Notice 2014-21 by revising a sentence in the Background section of that Notice to remove the statement that virtual currency does not have legal tender status in any jurisdiction and to make other changes. This Notice also explains that the revision to the Background section of Notice 2014-21 does not affect the answers to the frequently asked questions (FAQs) set forth in section 4 of Notice 2014-21.