The Internal Revenue Service (IRS) has released its draft 2022 IRS tax forms, including a section for US taxpayers to report certain transactions of digital assets such as non-fungible tokens (NFTs) and virtual currencies. Digital assets are defined as any digital representations of value that are recorded on a cryptographically secured distributed ledger or any similar technology. Assets which fall under this category shall be considered for federal income tax purposes. The taxpayers are required to disclose activity on Digital Assets of Form 1040 or 1040-SR, including receiving as a reward, award or payment for property or services or sold, exchanged, gifted or disposed of a digital asset in 2022. Any disposal of digital asset held as capital asset in 2022 requires the person to calculate the capital gain or loss and report that gain or loss on Schedule D of the Form, while an individual receiving any digital asset as payment for services or selling digital assets to customers in a trade or business shall report the income in the same way as other income of the same type.

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