Bitcoins

[oceanlovin'ea]

I have a client coming in today that invested in bitcoins. When he called for an appointment he said he had lost quite a bit of money with the bitcoins. How do I handle this? A Schedule D transaction? or is it handled at all on the tax return?
Thanks for your help. I meant to do more research on this but we just moved after living in the same house for 42 years. We remodeled my mothers house and moved there and are adding 1900 square feet to the back of the house for my daughter and her family to live in. So we have been a crazy mess for the last 5 months!!!!!

[kathyc2]

Notice 2014-21 address how to handle. Basically a Sch D transaction. https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21

[oceanlovin'ea]

He said he lost a lot of money investing in bitcoins. He will be here in a few minutes so I will see what we are dealing with. I did read Notice 2014-21. Thank you

[kathyc2]

Sorry, didn't read the part where there was a loss. From what I understand of them, he could have used the coins for purchases over the years he held them. If he just gives you the amount he used to purchase the "coin" and now what he sold them for, he might not be giving you the full picture. If he did use them to purchase items in prior years, there may be unreported gains for those years.

[Lion]

And, exchanging Bitcoin for another cybercurrency is a transaction, too. He could have obtained some for his services/compensation. Bought items, biz or personal, with them. Hopefully he has his whole timeline well detailed for you!