SNEAK PEEK
- The Treasury Department’s tax division’s draft guidelines mentioned digital assets including NFTs.
- The crypto section may yet be changed before it becomes official because the final tax guidelines have not yet been made public.
- This week, the American Internal Revenue Service took action to answer at least one query from cryptocurrency investors.
The Treasury Department’s tax division recently issued an updated draft of its form 1040 instructions for 2022 that replaces the outdated category for virtual currency with more inclusive new wording on digital assets, including mentioning NFTs. The draft guidelines define digital assets as any digital representations of value that are recorded on a cryptographically protected distributed ledger or any equivalent technology. Digital assets, for instance, comprise non-fungible tokens and digital money like cryptocurrencies and stablecoins.
A digital token that serves as a unit of account, a store of value or a medium of exchange was defined more specifically in the prior year’s virtual money portion of the U.S. tax filing instructions. According to the most recent paper, cryptocurrency owners would need to figure out and record their taxable income if you disposed of any digital asset in 2022 that you held as a capital asset through a sale, exchange, gift, or transfer.
A possible forerunner to regulation advice, the IRS has provided US cryptocurrency owners with a little more clarification over how to disclose digital assets on their 1040 income tax forms. The Internal Revenue Service expanded the guidelines for the 2022 tax form draft instructions on how taxpayers should record their cryptocurrency transactions.
