Yes, you must answer "Yes" to the Form 1040 question regarding whether at any time during 2020, you received, sold, sent, exchanged, or otherwise acquired any financial interest in any virtual currency. This is because the purchase of virtual currency with real currency constitutes acquiring a financial interest in virtual currency. The IRS has clarified that digital assets, including virtual currencies, are treated as property for federal income tax purposes. Transactions involving digital assets are subject to the same general tax principles that apply to other property transactions. Therefore, acquiring virtual currency through purchase is a transaction that must be reported on Form 1040, as it falls under the broader category of acquiring a financial interest in a digital asset.
Sources:
Rev. Rul. 2019-24
Notice 2014-21
Instructions for Form 1065 (2023)
Instructions for Form 1040-SS (2023)
Instructions for Form 1041 and Schedules A, B, G, J, and K-1 (2023)
1040 (2023)
Instructions for Form 1040-C (01/2024)
