What is a digital asset?
A digital asset refers to any digital representations of value that are recorded on a cryptographically secured distributed ledger or any similar technology. Examples of digital assets include cryptocurrency, stablecoins, non-fungible tokes (NFTs), meme coins, and other virtual currencies.
Beginning in tax year 2024, a line item was added in Schedule I, Part I - Additional Income, Line 8v, to report digital assets received as ordinary income not elsewhere reported on the tax return. Types of digital assets reported on Line 8v as ordinary income may include:
- Digital assets obtained through a hard fork.
- Income from mining, staking, or similar activities.
- Digital assets received as payment for goods and services.
- Digital assets received as rewards or bonuses.
Program entry
To enter digital assets received as ordinary income in the individual income tax return in TaxSlayer ProWeb, from the Federal Section of the return (Form 1040, select:
- Income
- Other Income
- Other Income
- Taxpayer or Spouse - Indicate who the asset belongs to if filing jointly.
- From the dropdown menu, select Digital Assets Received as Ordinary Income Not Reported Elsewhere and enter the fair market value of the asset when it was received.
Note: Digital assets that were received as gifts or inheritance are not reported on this line.
When a digital asset is sold, it is reported as a capital gain or loss on Form 8949. See the article on Form 8949 here for further information on making a capital gain or loss entry.
Additional Information: