Digital Asset Investors Embrace Bullish Optimism

Investors embraced bullish optimism over the incoming Donald Trump administration's pro-digital policies, with the price of bitcoin (btc) skyrocketing since his presidential victory earlier this month, hitting multiple milestones on its way to $100,000. .

It feels like the days of bitcoin Tulip Mania are back as its price surpassed $98,800 to hit a new record high on November 21 after the US Securities and Exchange Commission announced that Chairman Gary Gensler lower starting January 20, the day Donald Trump is scheduled to be sworn in at the White House. bitcoin fever is once again hot and global.

bitcoin payments to athletes

In an unprecedented development for the UAE sports scene, Bitball Flag Football showdown: In the first NFL event to feature some of the biggest names in American football, players will be rewarded in bitcoin . Organized through the 75 national member federations of the International Federation of American Football, flag football recently became the official game of the NFL Pro Bowl and was confirmed as part of the 2028 Summer Olympics.

Leading the charge is eleven-year NFL veteran and Super Bowl champion Russell Okung, a prominent advocate for athlete financial sovereignty and the first professional athlete to receive his salary in bitcoin. George Mekhail, Vice President of Operations at btc Inc., commented on the topic:

“The flag football game at our bitcoin event is no coincidence – it embodies the collaboration and resilience of the bitcoin community. Russell Okung's push to empower athletes with bitcoin is a forward-looking vision that brings us further into mainstream consciousness. We are proud to host this mission at the bitcoin Conference, bringing purpose and excitement to our attendees..”

The star-studded lineup also includes more than 22 football legends, such as Antonio Brown, Le'Veon Bell, Johnson Bademosi, Jurrell Casey and Jared Evans. The roster also includes notable players such as Dez Bryant, Dontrelle Inman, Mohammad Sanu, Randell Johnson, Michael Thomas, Craig Robertson and Wesley Woodyard, representing a variety of talent from across the NFL.

The Bitball Flag Football game will be part of the official lineup of side events at this year's bitcoin MENA 2024, December 9-10, 2024, the world's largest gathering of bitcoin investors, developers and stakeholders. All bitcoin MENA ticket holders will have free access to watch the Bitball Flagg football match live on December 10 at Al Nahyan Stadium in Abu Dhabi starting at 7 pm. Separate tickets will be available for purchase for the event which combines sports, technology and digital assets in PlayBitBall, which will be distributed globally via live streaming on the bitcoin Magazine platform, Rumble and YouTube, allowing global audiences to witness this unparalleled fusion of bitcoin. and professional football, marking a cultural milestone for the UAE and the GCC region as a whole.

Taxation of digital assets

Good news for Bitball Flagg Football players is that the United Arab Emirates has It has no income tax and has recently abolished value-added taxes on digital asset transactions. By exempting individuals and businesses from VAT on the transfer and conversion of digital assets, the UAE has positioned itself as a potential hub for digital currencies (see Coincub Tax Report <a target="_blank" href="https://www.blockpit.io/crypto-tax-study-2024″ target=”_blank” rel=”nofollow”>here). Therefore, players will not be subject to double taxation on income from their digital assets in the absence of a UAE-US Income Tax Treaty.

However, Bitball Flagg Football players will be subject to worldwide US taxes on their digital assets, which are treated as property and subject to income or capital gains tax.

Digital assets taxed as income in the US

The IRS provides guidelines for when digital assets count as income instead of capital gains. Transactions that are considered additional income subject to income tax include:

• Receive payments in digital assets (like Bitball Flagg soccer players).
• Digital asset mining (hobby level).
• Receive an airdrop.
• Receive new digital assets from a hard fork.
• Gambling rewards.
• Referral bonuses.
• Earning interest through lending protocols.
• Earn new liquidity pool tokens, governance or reward tokens on DeFi protocols.
• Learn how to earn rewards.
• Watch to earn rewards.
• Browse to earn rewards.
• GameFi Rewards.

The taxation of digital assets as an investment in the US

Digital assets held as investments are subject to tax at different tax rates. Short-term gains (held <1 year) are taxed between 10% and 37%. If you held a particular digital asset for more than a year, you are eligible for long-term capital gains (held for more than 1 year) at 0%, 15%, or 20%, depending on your taxable income and filing status. . nfts considered collectibles may be subject to a 28% tax.

Losses on digital assets can offset gains and reduce ordinary income by up to $3,000. Any unapplied loss can be carried forward to future tax years until it is fully utilized.

He IRS does not allow digital asset investors to claim lost or stolen cryptocurrency as a capital loss, so if a digital asset investor loses a digital asset due to a hack, scam, or loss of private keys, the investor is out of luck and It is best to simply discard it.

Tax relief on digital assets

US investors in digital assets can benefit from some tax-free reliefs that can help them pay a little less in taxes:

• Gift digital assets for less than $18,000: You can donate up to $18,000 in digital assets per person tax-free (by 2024). This is known as the annual gift tax exclusion. This can help you take advantage of lower income tax rates in your household and pay less taxes overall. If you donate more than this amount, as long as you fall under the lifetime gift tax exemption of $13.61 million in 2024, you will not need to pay gift tax. However, you may need to file Form 709 (more on this below). By 2025, this increases to $19,000 with a lifetime exemption of $13.99 million.

• Capital Gains Tax-Free Subsidy: If you earned less than $47,026 in 2024 in total income (including profits from your digital assets), you will not pay capital gains taxes on long-term gains. By 2025, this increases to $48,350.

• Long-term capital gains tax rate: If you hold your crypto for more than a year, you'll pay a lower long-term capital gains tax rate, between 0% and 20%, depending on how much you earn.

How to declare digital assets on tax returns

The owner of a digital asset files digital asset taxes with their annual tax returns by answering the IRS' digital asset transactions question. A variation of this seemingly harmless question appears at the top of Forms 1040, Individual Income Tax Return; 1040-SR, US Tax Return for Seniors; and 1040-NR, U.S. Nonresident Alien Income Tax Return. The question has also been added to these forms: Forms 1041, U.S. Income Tax Return for Estates and Trusts; 1065, U.S. Return of Corporate Income; 1120, U.S. Corporate Income Tax Return; and 1120S, U.S. Income Tax Return for an S Corporation.

The IRS asks this question with variations for corporations, partnerships, estates, and trusts:

“At some time during the year, you: (a) received (as a reward, prize or payment for goods or services); or (b) sell, exchange or otherwise dispose of a digital asset (or a financial interest in a digital asset)?” Yes or no? The table indicates that they had reportable digital asset tax transactions.

Report digital asset dispositions, capital gains and losses on Schedule D (1040) and Form 8949.

Report digital asset income on Schedule 1 of Form (1040) or Schedule C (1040).

Report digital assets held in foreign currencies, such as an exchange in the United Arab Emirates, on FATCA Form 8938 and FBAR FinCEN Form 114.

Digital Asset Tax Disclosure Deadline

The US fiscal year is from January 1 to December 31. The deadlines for taxing digital assets coincide with those for traditional assets: April 15 for most people. If a digital asset investor is an American expat, they have until June 15.

If you requested an extension to file your taxes using Free File or Form 4868, you will automatically have an extension until October 15.

Can the IRS and state tax departments track my digital assets?

Yes, both the IRS and state tax departments can track digital assets. The IRS won cases against Coinbase, Kraken, and Poloniex, forcing them to share customer data, and the IRS has cross-border reach for tax evasion.

This February, the IRS taxed his first stand-alone crypto tax fraud case, which led to Frank Richard Ahlgren III pleading guilty to filing a false tax return underreporting profits from the sale of $3.7 million in bitcoin. USA v. Ahlgren was the first crypto case with tax evasion allegations unrelated to another crime; It is also now the first independent crypto tax fraud case to result in a guilty plea. Ahlgren faces up to three years in prison.

At the state level, bitcoin Bull billionaire and MicroStrategy co-founder Michael Saylor, who evaded more than $25 million in local income taxes from 2005 to 2022 through falsified records and returns, paid $40 million to settle a lawsuit that alleged he had committed massive crimes at the local and state level. tax fraud by lying to authorities for years about where he lived.

Ahlgren, Saylor and the case of the Department of Justice <a target="_blank" href="https://www.justice.gov/opa/pr/early-bitcoin-investor-charged-tax-fraud” target=”_blank” rel=”nofollow”>against Roger Ver (aka “bitcoin Jesus”) underscores the commitment of the IRS, the State Department of Revenue, and the DOJ to pursuing digital tax evasion. The IRS indicated earlier this year that its audit would focus on digital assets and high-network individuals. In light of these developments, digital asset owners and investors may wish to re-evaluate their tax reporting and filing obligations to ensure compliance.