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What taxpayers need to know about digital asset reporting and tax requirements

The IRS reminds taxpayers in Tax Tip 2024-21 IR-2024-18 that they must check the box indicating whether they received digital asset as a reward, award or payment for property or services or disposed of any digital asset held as a capital asset through an exchange, sale or transfer.

Taxpayers filing 2023 tax returns must check a box indicating whether they received digital assets as a reward, award or payment for property or services or disposed of any digital asset that was held as a capital asset through a sale, exchange or transfer.

A digital asset is a digital representation of value that is recorded on a cryptographically secured, distributed ledger or any similar technology. Common digital assets include virtual currency and cryptocurrency, stablecoins and non-fungible tokens.

Examples of digital assets transactions include:

  • Sale of digital assets.
  • Receipt of digital assets as payment for goods or services.
  • Receipt of new digital assets because of mining and staking activities.
  • Receipt of new digital assets because of a hard fork.
  • Exchange of digital assets for property, goods or services.
  • Exchange or trade of digital assets for another digital asset(s).
  • Any other disposition of a financial interest in digital assets.

Reporting digital assets transactions

Taxpayers must report all income related to their digital asset transactions.

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