This week’s Triple Entry issue is packed full of great stuff to help you nurse your Halloween candy hangover, including:
- A satirical but succinct summary of the IRS’s updated language for digital assets in the 2022 1040 instructions
- A not-so-technical analysis of why bitcoin miners are in trouble
- The TL;DR of the spicy debate between SBF and Erik Voorhees on crypto regulation
- A sprinkling of extra memes and gifs (sorry, still hyped up on sugar, I guess).
This is a beefy one, folks. Guess that’s a comment on what a crazy industry we’re in. The amount of stuff that goes down in just two weeks is straight up mind boggling.
And “calc”-you-later. 🧮
IRS Updates Digital Asset Language, Boosts Revenue Forecasts
I hate to be the bearer of bearish news, but preparing your (or your clients’) crypto tax returns just got trickier. Remember that curious little box on the 1040 tax form asking whether or not you (or your client) bought or sold “virtual currency” during the year? Well, that little box just got an upgrade.
The IRS released an updated draft for its 2022 instructions for form 1040 that replaces the “virtual currency” classification with that of a broader category of “digital assets,” including explicit recognition of NFTs.
The draft instructions state that “digital assets are any digital representations of value that are recorded on a cryptographically secured distributed ledger or any similar technology. For example, digital assets include non-fungible tokens (NFT) and virtual currencies, such as cryptocurrencies and stablecoins.”
The Good News
Put on your leotard because finding a silver lining in anything the IRS does requires serious mental gymnastics.
Typically, the IRS is very slow in publishing guidance like this, so at least they’re moving in a direction, even if it’s not necessarily the right one. So now, instead of pretending like you know how NFTs are taxed, we have somewhat clear rules. Surprisingly, the new instructions even account for the receipt of digital assets as a result of mining, staking, and hard forks. Crypto tax friends, I know what you’re thinking: