The crash and burn of crypto exchange FTX drove home the realities of virtual currency once again this winter. The impact of the management style of FTX ex-CEO Sam Bankman-Fried is evident up and down the blockchain. Most recently, FTX solicited the return of the political donations and contributions it already made. While asking nicely, the debtor group in the FTX bankruptcy also mention legal pursuit to recover any unreturned funds.
The morass around the FTX meltdown underscores the sharp focus of the IRS on its pursuit of eligible tax proceeds from those who invest in or own convertible virtual currency, stablecoin, or non-fungible tokens (NFTs).
Tax regulations around virtual currency have tightened to make tax fraud and tax crime around crypto more difficult. With the 2022 tax season upon us, here are some things you need to know about reporting crypto and other virtual currency:
When in doubt, check out the 1040 instructions for 2022 (page 15 for digital assets). And when you are concerned about tax implications, digital asset audits (yes, they do occur), or other crypto tax questions—speak with a knowledgeable tax attorney for answers.
Serving local and international clients from offices in Chicago and Cleveland, the tax group at Robert J. Fedor, Esq., LLC helps you respond strategically to questions about cyber disclosure, federal income tax requirements, or allegations surrounding fraudulent tax returns. Call 800-579-0997 or contact us today.