Today, we are reminded by the IRS that taxpayers are due to answer a digital asset questions and report all income related to these digital assets on their 2023 tax return.
Let us revisit the question… What is a digital asset? Digital asset is a value.. generally anything that is created and stored digitally, or represented digitally (virtually) that is identifiable and discoverable.
Digital assets include:
- Convertible Virtual Currency and Cryptocurrency. These are the digital currencies that have an equivalent value in real currency , acting as a substitute for a real currency. Can be used as a payment to purchase / exchange goods and services, trade digitally among users, or exchange into a real (“fiat”) currency or other digital assets.
- Stablecoins
- Non – Fungible Tokens (NFTs)
Examples for digital assets…Logos, Metadata, Content, Animation, Audio / Music, Documents, Videos, Books, Illustrations, Emails / Email accounts, Social media accounts, Gaming accounts, etc…
If you have invested into digital assets, doing transactions / exchanges, IRS requires reporting of these activities on your income tax return.
Should you need help with Digital Assets, Virtual (Crypto) Currency reporting or have questions, please contact our office at 310.666.0244
Reference Page:
https://www.irs.gov/businesses/small-businesses-self-employed/digital-assets
https://www.nasdaq.com/solutions/marketplace-technology/about-digital-assets