Are You Up to Date on Taxation of Digital Assets?

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Questions and Answers

True or false: Digital assets include only cryptocurrencies.

False (B)

What can happen if your SSN is incorrect or missing on your tax forms?

  • You may receive a larger tax refund
  • You may receive a tax credit
  • You may be audited by the IRS (correct)
  • You may be exempt from paying taxes

True or false: Digital assets are not subject to federal income tax.

False (B)

How can you apply for an SSN?

<p>Fill out Form SS-5 and submit it with evidence documents (B)</p> Signup and view all the answers

True or false: If you own a digital asset, you have a financial interest in it.

<p>True (A)</p> Signup and view all the answers

How can you obtain Form SS-5?

<p>It can be obtained online, from local SSA office, or by calling the SSA (A)</p> Signup and view all the answers

How long does it take to get an SSN once all evidence and information are submitted?

<p>2 weeks (A)</p> Signup and view all the answers

True or false: Reporting of certain actions or transactions with digital assets is not required.

<p>True (A)</p> Signup and view all the answers

True or false: Income from the sale of digital assets should be reported in the same way as other types of income.

<p>True (A)</p> Signup and view all the answers

What should you do if your name or SSN on your social security card is incorrect?

<p>Call the SSA and inform them of the mistake (B)</p> Signup and view all the answers

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Study Notes

  • Digital assets are digital representations of value recorded on a secure distributed ledger.
  • Examples of digital assets include NFTs, cryptocurrencies, and stablecoins.
  • Digital assets are treated as such for federal income tax purposes.
  • Check "Yes" on Form 1040 or 1040-SR if you received, sold, exchanged, gifted, or disposed of a digital asset.
  • You have a financial interest in a digital asset if you own it or have an ownership stake in an account that holds it.
  • Certain actions or transactions with digital assets don't require checking "Yes."
  • If you disposed of a digital asset held as a capital asset, use Form 8949 to calculate capital gain or loss and report it on Schedule D.
  • If you received digital assets as compensation for services or sold them in a trade or business, report the income as you would other income of the same type.
  • Answer "Yes" or "No" to the digital asset question on Form 1040 or 1040-SR.
  • For more information, visit IRS.gov/virtualcurrencyfaqs.

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