Research Problem 4. Your friend Hui is an investor in bluecoin, a virtual currency.

Indicate whether and how she is subject to Federal income taxation in the following circumstances.

a. Earns $1,000 in bluecoin from mining.

b. Purchases $1,000 in bluecoin from another friend.

c. Sells the purchase in part

(b) in the market to a third party for $1,400.

d. Spends $1,000 of bluecoin to acquire an asset worth $1,500.

e. Spends $1,000 of bluecoin to acquire an asset worth $750.

f. Holds bluecoin that she bought in February for $1,000. On December 31, the bluecoin is worth $1,200.

Use internet tax resources to address the following questions. Look for reliable websites and blogs of the IRS and other government agencies, media outlets, businesses, tax professionals, academics, think tanks, and political outlets.