The IRS has added a question about income from digital assets to four forms covering partnerships, corporations, S corporations, and estates and trusts for 2023 tax returns.
The question generally asks: "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)?"
For tax year 2023 returns, the IRS added the question to 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.
All taxpayers must answer the question. If they answer "yes," then they must report all income related to digital asset transactions, including any sold, exchanged or transferred as a capital asset in 2023 or digital assets given as a gift. Read more.