The Internal Revenue Service (IRS) in the United States has modified and expanded the digital asset question on income tax forms for the 2023 tax year. The question, present on Form 1040 for reporting U.S. Individual Income Tax Return, has been revised to include the phrasing: “At any time during 2023, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?” Additionally, the digital asset question has been added to four more tax forms: 1041 (U.S. Income Tax Return for Estates and Trusts), 1065 (U.S. Return of Partnership Income), 1120 (U.S. Corporation Income Tax Return), and 1120-S (U.S. Income Tax Return for an S Corporation). The IRS emphasizes that all taxpayers must answer the digital asset question, regardless of whether they engaged in a transaction involving digital assets during the tax year. The expanded inclusion of the question on additional tax forms signifies a broader scope, covering various taxpayer entities such as estates, trusts, partnerships, corporations, and S corporations. As the crypto industry continues to evolve, regulators are keen on ensuring compliance and transparency in digital asset transactions for tax purposes. Taxpayers dealing with digital assets should be mindful of these reporting requirements and provide accurate information on their tax returns to avoid potential issues with tax authorities. (Source: news.bitcoin)
