IRS Responds to Mass Crypto Adoption

Many sectors, especially in entertainment, are now increasingly using crypto. The objective is to develop unique infrastructures in order to finance productions and create new sources of income, with variable results. Companies have made profits through these methods. So the IRS has released new reporting rules. These rules are for those who have used cryptos in the last fiscal year.

IRS: All Crypto Income Must Be Declared

The first notable change on income tax forms is the use of the terms “digital assets“, in the place of “virtual currencies”. The later IRS digital asset checklist explicitly states that receiving, transferring, gaining, or selling crypto for monetary gain must be reported. However, there are instances where reporting and taxation requirements change. This is simply holding a digital asset, transferring between own wallets, or buying with fiat.

The author of the best-selling Amazon “Cryptocurrency in a Nutshell: Unlocking the Decentralized”, Abhinav Soomaney, has assisted clients with the declaration of cryptocurrency and blockchain since 2018. He said NFT tax calculations are challenging. This is the case when NFTs are transferred from one wallet to another and sold over the counter. This makes it difficult for accountants to keep track of it, he explained.

IRS Responds to Mass Crypto Adoption by Publishing New Reporting Rules
IRS Responds to Mass Crypto Adoption by Publishing New Reporting Rules

The entertainment industry must take this into account

To overcome this tracking problem, Soomaney advocates the use of manual transfer analysis whereby all transfers made by the customer are combined. They will then be organized chronologically to ensure the correct cost basis and acquisition date for crypto transferred, sold, or held on another platform.

On the other hand, the entertainment, film and television industry has popularized the use of crypto for various reasons.. But whatever the reason, income must be reported appropriately and crypto is not an exemption, he argues.

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