Dropdown button for navigation mobile view

How to report digital asset income

Posted by: Zaher Fallahi
Posted On: Jun 05, 2024

If a digital asset transaction results in taxable gain or loss, you must report all income from your digital asset transactions. Follow these steps:

Keep records

If you had digital asset transactions, keep records that document:

The Internal Revenue Code and regulations require taxpayers to maintain sufficient records to establish the positions taken on federal income tax returns.

Calculate your capital gain or loss

To calculate the capital gain or loss of a digital asset that you disposed of in a taxable transaction, you’ll need this information:

How to determine if your capital gain or loss is short-term or long-term

The period when you hold the digital asset (the holding period) begins on the day after you acquired the digital asset and ends on the day you sell or exchange it.

Find details on short-term and long-term capital gains and losses in  IRS Publication 544.

Determine your basis

The basis of property is the cost of it. Generally, the basis of a digital asset is the cost in U.S. dollars plus any allocated transaction costs when you purchased or exchanged it.

How you determine your basis for digital assets depends on the type of transaction you had.

To determine your basis, you’ll need this information:

Find details on basis in IRS Publication 551.

Report digital asset income on the right form

The form you use depends on the type of transaction:

If you sold, exchanged or otherwise disposed of a digital asset you held as a capital asset

Use Form 8949 to report your capital gain or loss on the transaction on Schedule D (Form1040).

If you have other ordinary income related to digital assets

To report income from forks, staking, mining, etc., use Form 1010 (Schedule 1).

Source: IRS

End of IRS Material

Zaher Fallahi, Tax Defense Attorney, CPA, assists taxpayers nationwide with Cryptocurrency Tax, Anti-Money Laundering, Foreign Gifts & Inheritance, Delinquent FBAR filing, IRS audits, Tax Preparation, Offer-In-Compromise, Undisclosed Foreign Bank Accounts, and other international tax matters. Tel.: (310) 719-1040, (714) 546-4272 and (877) 687-7558 toll free nationwide. Websites: zflegal.com and zfcpa.com E-mail taxattorney@zfcpa.com

It's been an honor to know Zaher Fallahi, Esq for the past 49 years.He is one of kind in almost everything. His clients and friends are always his priority. In my long life, I have had the chance to be helped by many people. But ZaherFalahi is a distinguished personality that his professionalism helped me to succeed in life.And that's why I never hesitate to refer my family and friends for all their legal and financial matters to him.
I have had the pleasure of knowing attorney Zaher Fallahi for over 10 years in a professional capacity. Zaher is knowledgeable, diligent, capable and a conscientious attorney. Zaher has a strong reputation in his field - International Tax and Undisclosed Foreign Bank Accounts - and is a good person, in general. I highly recommend him for your legal needs.
Mr. Fallahi's expertise was critical in helping me navigate my complex tax matter, and helping me resolve it successfully. I am very happy to have worked with him. He was very knowledgeable and had excellent service.
More reviews
Request Consultation