How is Cryptocurrency Taxed? Virtual currencies are treated as property and not as currency for federal tax purposes in the United States.If it turns out forming an LLC is right for you, we'll also provide a step-by-step guide on how to form one and transfer your existing crypto assets into it. Complete Form 8949 – You must report each cryptocurrency sale or exchange on IRS Form 8949, including the cost basis, sale price, and capital gain or loss. In this article, I will discuss the pros and cons of owning cryptocurrency from an asset protection standpoint. Yes. When you sell virtual currency, you must recognize any capital gain or loss on the sale, subject to any limitations on the deductibility of capital losses. Before filling out Form 8949, you'll need to declare that you have transacted in cryptocurrency near the top of the Form 1040. Florida does not address the sales and use tax treatment of transactions involving bitcoin or other virtual currency. Georgia.