damp_sock

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  Guide: how I report digital asset sales on my taxes without getting audited

  Yes. The $600 threshold is for 1099-K reporting by payment processors, not a personal exemption. You're supposed to report all income. I report everything and let deductions bring my taxable down.

  2d ago

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  Guide: how I report digital asset sales on my taxes without getting audited

  Not legal advice, just what my CPA and I do. If you sell digital assets (accounts, domains, software) regularly, you're probably running a business in the IRS's eyes. Here's my system: 1) I treat every sale as ordinary income. I don't try to classify accounts as capital assets — the IRS hasn't ruled clearly and I'd rather not be the test case. 2) I keep a spreadsheet: date, buyer, item, sale price, escrow fee, crypto tx hash. 3) I report the gross, then deduct business expenses (software, escrow fees, VPNs, hardware used for farming). 4) For crypto payments: I record the USD value at the time of receipt, not when I convert to fiat. Clean books = no audit flags so far, 3 years running.

  2d ago