Sell a domain name for bitcoin? Make sure to note it to the IRS

A crypto transaction is not a tax-free transaction.

U.S. taxpayers who sell domain names for cryptocurrencies such as bitcoin and ether must note these as income on their income tax returns. For this year’s tax returns, the Internal Revenue Service is setting a trap for anyone who doesn’t note cryptocurrency profits.

The Wall Street Journal notes that the standard 1040 tax form this year will include a fresh question:

At any time during 2020, did you sell, receive, send, exchange or otherwise acquire any financial interest in any virtual currency?

The IRS is making this explicit to avoid having taxpayers claim ignorance of the rules.

Of course, how this works for businesses might be a bit different than for individuals. It seems logical to note the value of the cryptocurrency when you receive it as income, but you might need to book a loss or gain when you dispose of it. Ask your accountant.