Vivek converted $$2,500$ into E$$coin in November $2022.$ In October $2023!$ when the valuc of his ho;ciing incro.scd $($o $$4,000,$ Vivek decided to purchase a watch using E$$coin$.$ He spent tho entire holding on thc watch. will Vivek repo$*$t this on his tax return?

No reporting is necessary until he sells the watch. At that time, he will report a gain or loss, depending on the sale price of the watch.

o As a short$-$term capital gain of $$1,500$ on Form $8949.$ His basis in the watch is $$4,000.$

o As $$4,000$ in ordinary income.

No reporting is necessary when purchases are made using virtual currency