Question 2 of 15.

Vance had a computer crash and lost most of his personal data, including the private keys to his crypto holdings. What steps can Vance take to regain access?

The keys will reset after 72 hours, so he will be able to access his holdings at that point.

He can contact the coin exchange he uses, and they will be able to restore his access and reset the keys.

Unless Vance had the information backed up, his crypto will be inaccessible for him or anyone else.

Blockchains are a public ledger, so there are no private keys involved. There is no effect on his access.

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Question 3 of 15.

Which of the following is an example of convertible virtual currency?

Central bank digital currency.

Dogecoin.

World of Warcraft gold.

U.S. dollars.

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Question 4 of 15.

Armando received crypto coins from an airdrop. How will he determine his basis in the coins?

Armando's basis is equal to the fair market value (FMV) the day before the airdrop.

Coins received in an airdrop are only treated as ordinary income. There is no basis for them.

Armando's basis is equal to the FMV at the date and time he constructively received the coins.

Armando's basis is equal to the FMV on the date he disposes of them. Therefore, coins received in an airdrop never show a gain or loss.

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Question 5 of 15.

Maury bought one full bitcoin in March 2021. His basis in the coin is $6,118. In July of 2022, he donated 0.2 of the coin to a qualified charitable organization. The fair market value of a full coin at the time of donation was $29,212. What is his deductible charitable contribution?

$1,224

$5,842

$6,118

$29,212

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Question 6 of 15.

Agostino purchased five crypto coins for $1,300 in October of 2021. He sold two of the coins for $650 in May of 2022. He later sold the remaining three coins for $695 in September of 2022. What is his net gain or loss on the coins?

$85 short-term loss.

$45 short-term gain.

$130 short-term gain.

$145 short-term gain.

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Question 7 of 15.

Amina purchased and traded for various parts of crypto coins throughout 2021 and 2022. She has decided to sell some of her holdings to pay for a home renovation. How can Amina decide which coins to sell first for tax purposes?

All crypto holdings are sold on a last-in, first-out (LIFO) basis. Amina must sell the newest coins first.

All crypto holdings are sold on a first-in, first-out (FIFO) basis. Amina must sell the oldest coins first.

Amina can choose to sell on a first-in, first-out (FIFO) basis or specific identification, as long as she knows the date and time obtained, basis and fair market value (FMV) of each unit at the time she obtained them, date and time disposed of, and FMV and basis when disposed of.

Amina can choose to sell on a last-in, first-out (LIFO) basis or specific identification, as long as she knows the date and time obtained, basis and fair market value (FMV) of each unit at the time she obtained them, date and time disposed of, and FMV and basis when disposed of.

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Question 8 of 15.

Krystal stakes some blocks as part of her mining operation. She received 350 coins in 2022 from this. What form might she receive to report this income?

Form W-2.

Form 1099-DA.

Form 1099-NEC.

Form 1099-SA.

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Question 9 of 15.

Kamal sold crypto in 2021. What form or schedule will he use to report the income on his tax return?

Schedule 8812.

Form 8949.

Schedule 1.

Schedule C.

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Question 10 of 15.

Alya has a mining operation. In 2022, she mined 155 coins with a fair market value (FMV) of $240 per coin at the time she received them. She earned 11.25 coins for transaction verifications at the same time (and value). She had no other income from the mining. She sold 120 of the coins for $275 apiece a month later. Her deductible expenses for the mining operation were $14,500. Finally, she earned 10 coins for interest with a FMV of $2,200 total. How much net income does Alya show on her Schedule C?

$18,500

$25,400

$37,200

$39,900

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Question 11 of 15.

In 2022, Rainer disposed of some crypto he had held for several years. He is not entirely sure of his basis in the coins. How can he best determine the original purchase price in order to minimize the tax impact of the sale?

An estimate is fine. As long as Rainer knows roughly what the coins were selling for the month he made the purchase, he can use that as a range.

The coin exchange Rainer uses is responsible for providing that information, so he can contact them and find the original purchase price.

If he doesn't have the original records, he cannot recreate them. Rainer must use a $0 basis.

Rainer can use a blockchain explorer to determine the date and time of his purchase and the fair market value (FMV) of the coins at that time.

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Question 12 of 15.

Yuri bought and sold crypto several times during the year. He tries to log his transactions but isn't sure he got them all. He brought you the information he has. As his tax preparer, how would you proceed?

Use the transactions Yuri is certain of and complete Form 8949. Use that information to prepare the return.

Suggest that Yuri make his best estimate of the missing transactions and report those amounts in addition to the transactions he is certain of.

Suggest that Yuri use a crypto calculator to gather the data needed to accurately report his transactions.

Report the transactions Yuri is certain about on Form 8949, using the records he provides. Then, attach an electronic filing note (e-file note) stating that the information provided is incomplete. The IRS will notify Yuri of any discrepancies.

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Question 13 of 15.

Matty bought four coins on April 15, 2022, for $50 each. He sold them on August 4, 2022, for $35 each. The market continued to fall, and Matty bought five more of the same coin on September 1, 2022, for $25 each. Which response explains why Matty may or may not use his loss to reduce his capital gain income for the year?

Wash sale rules disallow the loss, so Matty may not claim it against his capital gain income.

The transaction is considered a like-kind exchange, so it cannot reduce his capital gain income.

The fair market value of the September purchase counteracts the sale loss, so Matty cannot claim the loss.

Matty can claim a deduction for the sale; he now holds five coins (at a basis of $25 each) for future disposition.

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Question 14 of 15.

Phoebe, who files single, holds several crypto wallets with large account balances. Her adjusted gross income (AGI) is expected to be around $475,000. If she decides to sell off some holdings, which of the following techniques can she use to lessen her tax impact?

Since the market always rises, she can sell first-in, first-out and will always be selling the lowest basis coins first.

If she reinvests her proceeds in a Qualified Opportunity Fund within 180 days, she may defer paying any tax on her gains. This will enable her to spread the tax impact over several years.

By selling her short-term holdings, she will avoid capital gains, and she can pay ordinary income rates on the gains.

Each wallet is treated as a separate business entity. She can sell a little from each and it won't impact her taxes at all.