This inquiry is irrelevant to a contentious $10,000 rule and relates to all taxpayers.
The IRS reminded all taxpayers on January 22 to respond to a query regarding digital assets and to report all income related to digital assets.
People who pay taxes are being asked: “Did you earn (as a bonus, prize, or payment for goods or services) or dispose of (sell, trade, or otherwise part with) any digital asset (or financial stake in one) at any point in 2023?”
Cryptocurrency, stablecoins, convertible virtual money, and non-fungible tokens (NFTs) were all deemed digital assets by the IRS.
The number of forms that include the question has significantly increased in the most recent version. The question first appeared on three different versions of the Form 1040 income tax return, one for people and two for seniors and non-resident immigrants.
The IRS has announced that four new income tax forms—Forms 1041, 1065, 1120, and 1120-S—now include this question. These forms pertain to different types of small businesses: estates and trusts, corporations, and partnerships.
Taxpayers are required to reply, the IRS said, with a “yes” or “no,” regardless of whether or not they transacted with digital assets.
A taxpayer is required to respond “yes” to the digital asset question if, in the 2023 tax year, they acquired digital assets by any means, whether it be payment, reward, mining, staking, a hard fork, or any other disposal or sale of digital assets. They are obligated to disclose such revenue as well.
Taxpayers have the option to choose “no” if they did not deal in digital assets, just owned them, moved them about in their wallets or accounts, or bought them using actual money like U.S. dollars.
Importantly, this implies that sellers of digital assets must choose “yes” as their response, whilst buyers of digital assets using the previously mentioned USD or cash transactions may select “no” as their answer.
This inquiry has nothing to do with a contentious tax regulation that mandates the 15-day reporting of all transactions involving sums above $10,000. Currently, this regulation only applies to cash, according to the IRS’s statement from January 16th, and not to digital assets.
Wallets