Basswood and Butternut are easiest for carving. I'm also going to try to carve a tap handle as a Xmas present. The basswood isn't the most beautiful wood as far as natural color and grain, but if you stain or paint it, it will look good.
I got this to carve on, since it is already almost the right size.
and these to use for the threaded insert
I also got one of these carving knives, although you could do the same thing with any knife. They are just ergonomic and have a nice small blade for detail work.
I'm going to attempt to carve a big "M" with a hop sitting on the top for my Brother-in-law.
Hope this helps! Good luck!