According to the IRS, a digital asset is property, not currency. Therefore, a digital asset is a capital asset. Furthermore, the IRS defines a digital asset as any digital representation of value recorded on a cryptographically secured, distributed ledger (blockchain) or similar technology. Examples of digital assets are Bitcoin, Dogecoin, Ether, Tether, and Non-fungible tokens (NFTs). Digital assets are exchanged on cryptocurrency exchanges like Coinbase and Kraken.
The IRS requires taxpayers to report digital asset income and gains if you: (a) receive as a reward, award or payment for property or services; or (b) sell, exchange, or otherwise dispose of a digital asset or a financial interest in a digital asset.
Accurately reporting taxable income and gains for digital assets can be complicated. Easy Tax Service in Prescott Valley can help if you have any questions about reporting Digital Asset taxable income and gains. Our tax preparers have over fifty years of combined experience preparing taxes. Easy Tax Service is open year-round and committed to providing high-quality tax preparation service at a price you can afford. Please give us a call at 928-775-7000 to schedule an appointment today.