Vivek converted $2500$ into E coin in November $2022$ in October $2023$ when the value of his holdings had increased $$4000$ decided to purchase a watch using Eco he spent the entire holding on the watch. How will Vivi report this on tax return no reporting is necessary until he sells the watch at that time. He will report again or lost depending on the sales price of the watch as a short term gain of $$1500$ on for $8949$ his basis in the Watch is $$4000$ has $4000$ in ordinary income. No reporting is especially when purchases were made using virtual currency.