Specialist, Tax Analyst Question 1 of 75. Reza converted $500 into Bitcoin in November 2020. In October 2021, when the value of his holding had increased to $1,500, Reza decided to purchase a wat How will Reza report this on his tax return? As a short-term capital gain of $1,000 on Form 8949. His basis in the watch is $1,500. > As $1,500 of ordinary income. No reporting is necessary until he sells the watch. At that time, he will report a gain or loss, depending on the sale price of the watch. No reporting is necessary when purchases are made using virtual currency. Mark for follow up