February 19, 2023
Salt Lake City, Utah – During tax season, the IRS publishes numerous IRS Notices to guide taxpayers in the preparation of the taxpayers’ tax returns. This week, the IRS on both Facebook and LinkedIn posted information about IR-2023-12 for any taxpayer who files IRS Forms 1040, 1040-SR or 1040-NR, the IRS provided information about the taxation of digital assets.
The IRS defines a digital asset as a “digital representation of value which is recorded on a cryptographically secured, distributed ledger.” The IRS then gives the following examples of common digital assets:
- Convertible virtual currency and cryptocurrency
- Non-fungible tokens (NFTs)
Most of us are familiar with cryptocurrencies which were introduced in 2009. These cryptocurrencies redefined what currency is or can be. When digital currency was introduced, the IRS did not have the tools to know how to tax any gain on this type of asset. Times have changed.
Since 2009, the IRS has worked hard to tax digital assets. In several IRS Notices, the IRS is working hard to hire 80,000 new employees. One main area of focus by the IRS will be digital assets. There is a belief, and rightfully so, this is an asset category that has been used to evade paying taxes to the IRS or there is a belief that the taxpayer does not understand when there is a taxable gain associated with the digital asset. If you have questions about whether or not you should check “Yes” or “No” on your 1040, 1040-SR or 1040-NR or questions about the IRS and how it treats gains or losses on digital assets, we can help.
Tax problems are legal problems, and we solve both. If you or someone you know has an issue with paying their federal taxes or state taxes and needs help to end their IRS nightmare, please contact us by either phone at: (801) 323-2112 or email at: email@example.com or go to my personal blog at: https://activerain.com/blogs/kbrowndad for additional tax topics.
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