Comment by troymc | Hacker News Reader

Comment by troymc | Hacker News Reader

Here's the IRS definition of "digital assets":

https://www.irs.gov/businesses/small-businesses-self-employe...

"Digital assets are broadly defined as any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.

"Digital assets include (but are not limited to):

- Convertible virtual currency and cryptocurrency

- Stablecoins

- Non-fungible tokens (NFTs)"

I would have thought that "digital assets" existed before there was any "cryptographically secured distributed ledger or any similar technology."

For example, a record label might own the original recordings of a 1995 song as a set of files. Legally, they own the copyright in the recording, but the copyright alone isn't enough because the copyright loses its market value if the associated files get destroyed. In other words, the files are 1) digital and 2) assets, because if someone bought the recording, they would reasonably expect to get both the copyright and the files.

They're clearly using it as a term of art. All parties involved more than capable of understanding that "Digital assets" as defined (explicitly!) by the IRS do not necessarily encompass everything that might be plausibly described by the noun-adjective pair "digital asset."

Agreed. It's no wonder there's a whole industry built around helping people understand the semantics of the tax forms.

“You keep using that word. I do not think it means what you think it means.” -Inigo Montoya, The Princess Bride.

You're not wrong, but I really don't think the blame for this particular term of art can be hoisted on the IRS. As far as government definitions go, this one isn't too bad for what they have to work with[1].

[1]: https://www.irs.gov/instructions/i1040gi#en_US_2022_publink1...

If you purchased crypto via Robinhood but not used a self-custody wallet, it is questionable as to whether you own a digital asset. You actually own some sort of financial instrument issued by Robinhood and no control over any underlying asset.

also i wonder if dollars in a bank account are 'any digital representation of value which is recorded on … any similar technology'

You pay taxes for your interest payments from the bank on your bank account.

In this case it looks like crypto is being taxed as a security, which makes sense. Just because it's ON THE INTERNET doesn't mean the government doesn't get its cut.

not paying taxes on interest payments doesn't seem to be part of the definition

Did you receive the security? That's income, you owe the IRS money. Did you sell the security and realize a profit? That's also income, you owe the IRS money.

At a macro level it's not hard to understand unless you want to be a special snowflake and pretend this thing you're doing is NEW and DIFFERENT and somehow not income, in which case maybe the IRS doesn't get its cut.

Chances are you're just deluding yourself or are relying on the IRS not coming after you.

you may have intended to respond to someone else, since this doesn't seem to pertain to my assertion that this definition of 'digital assets' seems to include dollars in a bank account

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