Last week, the IRS released a draft bill featuring a well-defined digital assets section that outlines if and how taxpayers will account for the use of cryptocurrencies, stablecoins and NFTs.
Page 16 of the draft defines digital assets as any digital representations of the value recorded on a “cryptographically secured distributed ledger or any similar technology.” 2021’s tax form required taxpayers to indicate whether they had received, sold or exchanged in “virtual currency” — with this term changing in the yet-to-issued 1040 tax form for 2022.
Taxpayers are required to answer the digital assets section of their income tax return whether or not they have engaged in digital asset transactions during the tax year. A number of situations will require American taxpayers to indicate yes to the question on digital assets of Form 1040 or 1040-SR. This includes receiving as a reward, award or payment for property or services or sold, exchanged, gifted or disposed of a digital asset in 2022.
The fought-over documents relate to a 2018 speech by former SEC division director William Hinman regarding the status of Ether (