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By: Rebecca K. Wohltman

When you meet with your accountant to prepare your tax return, remember that you are obligated to disclose crypto transactions on your tax return.

First, on the top half of the very first page of your Form 1040, you must check a box “Yes” or “No” stating whether you received, sold, exchanged, gifted, or otherwise disposed of a digital asset. If your accountant doesn’t ask you this question, be sure to discuss with him or her if you should check “Yes” to this question if you had any transactions involving crypto or other digital assets (such as NFTs) in 2022.

Second, gains and losses from sales of crypto need to be reported on Form 8949, just as you would report any other sale or disposition of property. Many wallets, including Coinbase, will be able to provide you with the detail to report these gains and losses. If your wallet cannot provide you with this information, it can be tedious to calculate gains and losses, but you will need to do so.

The IRS has increased its focus and pressure on disclosing crypto transactions and this focus seems like it will only intensify in coming years. Transacting in crypto is legal – you just need to properly report crypto transactions.

Professional Services Disclaimer: Please note that the information presented here is as an educational service, and while it contains information about legal issues, it is not legal advice. No warranty is made regarding the applicability of the information presented to a particular client situation, and the information set forth is not a substitute for original legal research, analysis and drafting for a particular client situation.