November 2018 LACBA MCLE Test and Answer Sheet

 

Test No. 282: Policing the Wild West of Cryptocurrency

To access the article related to this test, please click here. The article will open in a separate window.
  
Instructions for Obtaining MCLE Credit

The Los Angeles County Bar Association certifies that this activity has been approved for Minimum Continuing Legal Education credit by the State Bar of California in the amount of 1 hour. To apply for credit, please follow the instructions.

1. Study the CLE article.

2. Answer the test questions by marking the appropriate boxes. Each question has only one answer.

3. Photocopies of this answer sheet may be submitted; however, this form should not be enlarged or reduced. Mail the answer sheet and the $25 testing fee ($35 for non-LACBA members) to:

Los Angeles County Bar Association
Attn: Los Angeles Lawyer MCLE Test
P.O. Box 55020
Los Angeles, CA 90055

Make checks payable to Los Angeles County Bar Association.

4. You can also fill in the test form and submit it directly to LACBA by clicking "Submit." To submit your test answers online you will need to pay by credit card. After submitting your answers you will be presented with a screen requesting payment information. This information will be submitted in a secure mode which will allow you to safely transmit your credit card number over the Internet. If you prefer not to pay by credit card, please print this answer sheet and submit your responses by regular mail.

5. Within six weeks, Los Angeles Lawyer will return your test with the correct answers, a rationale for the correct answers, and a certificate verifying the CLE credit you earned through this self-study activity.

6. For future reference, please retain the CLE test materials returned to you.


 

Test Sheet
 



  
Mark your answers to the test by clicking next to your choice.  All questions must be answered.  Each question has only one answer. This test is worth 1 hour of credit.*

1. Cryptocurrency is a digital representation of value that may function as a medium of exchange, a unit of account, and/or a store of value.


2. Cryptocurrencies require financial institutions to validate their transactions.


3. To validate a Bitcoin transaction, participants in the network called “miners” receive bitcoins for being the first to solve a mathematical puzzle related to the verification of this transaction.


4. The potential advantages to cryptocurrency transactions over financial transactions through banks include being faster, having smaller transaction fees, and the ability to be conducted anywhere in the world as long as the parties have access to the Internet.


5. Purchasers of cryptocurrencies can never exchange them into traditional “fiat” currencies like U.S. dollars


6. A “private key” to a digital wallet is a randomly generated string of alphanumeric characters that functions like a PIN for a bank account.


7. Virtual currencies cannot yet be used for purchases from retail merchants.


8. Warren Buffet, CEO of Berkshire Hathaway, is a major proponent of the use of cryptocurrencies.


9. Cryptocurrencies concern law enforcement officials since those who use them can operate:





10. Cryptocurrency has been used to facilitate crimes ranging from narcotics trafficking to money laundering to terrorist financing.


11. Since cryptocurrencies are digitally based, they cannot be stolen from those who possess or store them.


12. The Internal Revenue Service treats cryptocurrencies transactions for income tax purposes as “property” transactions, subject to capital gains treatment.


13. If one uses cryptocurrency to buy a $20 pizza at the local pizzeria, there is no possibility that that person will owe the IRS capital gains tax on that transaction.


14. There is a de minimis exception to reporting capital gains on a cryptocurrency transaction on a federal tax return.


15. Over 1 million taxpayers reported virtual currency transactions on their federal tax returns from 2014 through 2015.


16. A “John Doe” summons requires a company that receives it to turn over records for a class of U.S. taxpayers that falls within a certain defined group of those who may have broken the tax laws, e.g., those U.S. taxpayers who have not reported their virtual currency transactions.


17. The IRS was completely thwarted in its effort to get names and records of U.S. account holders from Coinbase, the largest cryptocurrency exchanger in the U.S., when it served Coinbase with a John Doe summons for such names and records.


18. The IRS and the Department of Justice have used the “carrot and stick” approach of voluntary disclosure programs and criminal prosecutions to incentivize taxpayers in the past (e.g., with offshore unreported bank accounts) to report such accounts or face the potential of criminal consequences.


19. The IRS has increased its enforcement staff by over 20 percent in the last eight years.


20. No country has launched its own cryptocurrency.

 


Before clicking the Submit button, please verify that all questions have been answered. An error message will appear if not all questions are answered.

* The Los Angeles County Bar Association has been approved as a continuing legal education provider of Minimum Continuing Legal Education credit by the State Bar of California. This self-assessment activity will qualify for Minimum Continuing Legal Education credit by the State Bar of California in the amount of one hour.