Question

In 2024, using a cryptocurrency platform, Jaxon sold Bitcoin that he held as a capital asset, as an individual. How will this sale be reported on Jaxon's tax return?

He will check the "Yes" box next to the question on digital assets on page 1 of Form 1040 and:
He will use Form 8949 to figure his capital gain or loss and report it on Schedule D (Form 1040).
He will use Schedule C (Form 1040) to report the sale.
He will use Schedule E (Form 1040) to report the sale.
The gain or loss from the sale of virtual currency is not taxable and does not need to be reported anywhere else on his return.

Answer 1

Answer: He will use Form 8949 to figure his capital gain or loss and report it on Schedule D (Form 1040).

Reason: For individuals, virtual currency is treated as property. If the Bitcoin was held as a capital asset (an investment), gains or losses from its sale are capital gains/losses reported on Form 8949 and carried to Schedule D. (If the activity were a trade or business, ordinary income on Schedule C could apply, but that does not describe this case.)