In recent tax years the IRS has become increasingly invested in ensuring that taxpayers are paying the appropriate taxes on their digital assets.
The official IRS definition of digital assets includes:
Virtual currency (Bitcoin, Ethereum, etc)
Nonfungible tokens (NFTs)
Tokenized assets
Stable coins
Security tokens
Any other assets that are digital and have value, established ownership, and are discoverable
On every tax return filed in tax year 2022 the taxpayer must answer the following question yes or no.
Short Term Transactions
Short term capital gains (assets held less then one year) are taxed up to 37% as ordinary income.
Long Term Transactions
Long term gains (assets held greater than one year) are taxed at a lower rate of either 0-20%.
