Digital assets

Check No in the digital assets box if you:

• Didn't own any digital assets
• Only owned or held digital assets in a wallet or account, but did not engage in any digital asset transactions during the year
• Purchased, but did not sell, digital assets using U.S. or other real currency, including through electronic platforms
• Transferred digital assets from one wallet or account you own or control to another wallet or account you own or control (unless you paid a transaction fee with digital assets. This would be a digital asset transaction.)

Check Yes in the digital assets box if you:

Received digital assets for:

• Payment for property or services provided
• A reward or award
• Mining, staking and similar activities
• An airdrop as it relates to a hard fork

Disposed, sold, exchanged or transferred ownership of digital assets:

• For another digital asset
• For U.S. dollars or other currency
• In exchange or trade for property, goods or services in any amount
• By paying a transfer fee with digital assets
• By a transfer of ownership or financial interest

You have a financial interest in a digital asset if you:

• Are recorded as the owner of a digital asset
• Have an ownership stake in an account that holds one or more digital assets, including the rights and obligations to acquire a financial interest
• Own a wallet that holds digital assets

If you answer Yes, find how to report digital asset transactions.

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

• Your purchase, receipt, sale, exchange or any other disposition of the digital assets
• The fair market value as measured in U.S. dollars of all digital assets received as income or as a payment in the ordinary course of a trade or business

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

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

• Type of digital asset
• Date and time of transaction
• Number of units
• Fair market value at time of transaction (as measured in U.S. dollars)
• Basis of digital asset sold or disposed of

Find how to calculate gain or loss, identify the units sold or disposed, and determine fair market value for your situation: FAQs on virtual currency transactions.

If you own and use a digital asset for personal or investment purposes

The income would be taxed as a capital gain or loss when you sell or dispose it.

If you receive a digital asset in exchange for goods or services in a business context

The income would be taxed as ordinary income or a loss.

Find details about ordinary or capital gain or loss.

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

• Short-term capital gain: If you held the digital asset as a capital asset for one year or less before selling, exchanging, or otherwise disposing of the digital asset.
• Long-term capital gain: If you held the digital asset as a capital asset for more than one year before selling, exchanging, or otherwise disposing of it.

Find details on short-term and long-term capital gains and losses in Sales and Other Dispositions of Assets, Publication 544.

The basis of property is its cost. Generally, the basis of a digital asset is the cost in U.S. dollars.

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

Find how to determine your basis for your situation in FAQs on virtual currency transactions. To determine your basis, you'll need this information:

• Type of digital asset you acquired (for example Bitcoin)
• Date and time you acquired the digital asset
• Number of units of the digital asset acquired
• Fair market value of the digital asset when acquired (as measured in U.S. dollars)

Find additional details on Basis of Assets, Publication 551.

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, Sales and Other Dispositions of Capital Assets.

If you have other ordinary income related to digital assets

To report income from forks, staking, mining, etc., use Form 1040 (Schedule 1), Additional Income and Adjustments to Income PDF.

If you gave a gift in the form of digital assets

Use Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.

If you were paid as an employee or independent contractor with digital assets

For wages you receive as an employee, report the digital asset income on Form 1040, U.S. Individual Income Tax Return.

For payments you receive as an independent contractor, report the digital asset income on Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship).

If you sold, exchanged or otherwise disposed of digital assets to customers

Report these transactions on Form 1040 (Schedule C), Profit or Loss from Business (Sole Proprietorship) PDF.

For details, see tax year 2023 1040 (and 1040-SR) instructions.

The final regulations apply to brokers that take possession of the digital assets being sold by their customers, including operators of custodial digital asset trading platforms, certain digital asset hosted wallet providers, digital asset kiosks and certain processors of digital asset payments (PDAPs).

The regulations provide gain (and loss) computation rules, basis determination rules and backup withholding rules applicable to digital asset sale and exchange transactions.

The final regulations ensure that taxpayers will receive statements that include information reported to the IRS on Form 1099-DA, Digital Asset Proceeds from Broker Transactions, that will help them file their income tax returns and determine their tax obligations. This information will give taxpayers confidence in reporting income from digital assets while improving compliance efforts.

The regulations phase in reporting over time. Specifically, under the final regulations:

• Brokers must report gross proceeds for transactions effected on or after Jan. 1, 2025.
• Brokers must report basis on certain transactions effected on or after Jan. 1, 2026.
• Real estate professionals that are treated as brokers must report the fair market value of digital assets paid by buyers and received by sellers in real estate transactions with closing dates on or after Jan. 1, 2026.
• For certain sales of stablecoins and non-fungible tokens (NFTs), brokers may choose to report the transactions on an aggregate basis to the extent the sales exceed respective de minimis thresholds.
• A separate de minimis threshold also applies for PDAP sales.

The final regulations do not include reporting requirements for brokers commonly known as decentralized or non-custodial brokers that do not take possession of the digital assets being sold or exchanged.

Notice 2024-56 PDF and Notice 2025-33 PDF provide information regarding the transition relief for brokers;

For transactions occurring in calendar year 2025 (and reported in 2026), the IRS will not impose penalties for failure to file and to furnish Forms 1099-DA if the broker makes a good faith effort to file the Forms 1099-DA and furnish associated payee statements correctly and on time.

• The notices also provide relief to brokers from backup withholding obligations and associated penalties:
  • For all transactions that occur in 2025 and 2026
  • For 2027, for any transaction effected on behalf of a customer from whom the broker obtains the customer’s TIN and submits the customer’s name and TIN to the IRS’s TIN-matching program and receives a response that the name-TIN combination matches IRS records.
  • For 2027, for any transaction effected on behalf of a customer with a preexisting account showing a non-U.S. address if that customer has not been previously classified by the broker as a U.S. person.
  • Until further guidance is published, for dispositions of digital assets in return for certain NFTs or real property, and for certain sales effected by PDAPs.

• Notice 2024-57 identifies transactions for which brokers are not required to file Forms 1099-DA or furnish associated payee statements until the Treasury Department and IRS issue further guidance. This reporting exception does not apply to rewards or other compensation earned by or otherwise derived by participants in these transactions. The identified transactions are:
  • Wrapping and unwrapping transactions,
  • Liquidity provider transactions,
  • Staking transactions,
  • Transactions described by digital asset market participants as the lending of digital assets,
  • Transactions described by digital asset market participants as short sales of digital assets, and
  • Notional principal contracts.

Revenue Procedure 2024-28 PDF allows taxpayers to allocate units of unused basis to remaining digital asset units in digital asset wallets or accounts as of Jan. 1, 2025

• The Revenue Procedure provides transitional guidance on how taxpayers may transition to the basis identification methodology to allocate unused basis of digital assets to digital assets held within each wallet or account of a taxpayer as of Jan. 1, 2025, as required by the final regulations.