Cryptocurrency & NFTs
What’s New in 2025
Key IRS Updates:
Form 1040 “Digital Asset” checkbox expanded
Must be answered “Yes” even for non-taxable transfers if you engaged in crypto activity.
Introduction of Form 1099-DA
Exchanges now required to issue this for crypto sales & trades.
More enforcement:
IRS has partnered with Chainalysis & other analytics firms.
Expanded audit focus on crypto & NFT activity.
Takeaway: The IRS is watching more closely. Non-compliance is riskier than ever.
Taxable Events –Cryptocurrency
When You Owe Taxes (Even If You Didn’t Cash Out):
Selling crypto for USD or another
fiat = taxable
Trading one crypto for another (e.g., BTC → ETH) = taxable
Spending crypto to buy goods/services = taxable
Reporting Requirements
Forms You May Need to File:
Form 8949: Report each individual crypto/NFT sale
Schedule D: Summarizes overall capital gains and losses
Form 1099-DA: New for 2025, provided by exchanges
Other Requirements: Log wallet-to-wallet transfers (even if not taxable)
Track acquisition date, value, and reason for transfer
Pro Tip: Missing one form = potential audit trigger
Penalties & Risks of Non-Compliance
What Happens if You Don’t Report:
Civil penalties: Up to 25% of unpaid taxes
Criminal charges: For willful evasion or fraud
Examples:
John Doe summons used to identify Coinbase users
2023: Man fined $100k+ for failing to report NFT royalties
Key Message: The cost of non-compliance is much higher than accurate reporting
