Form 1040 - Digital Assets Question

[Yardley CPA]

Please verify my understanding on the digital assets question on form 1040.  Client purchased digital assets through her Robinhood broker account.  That was the extent of her digital activity, no trades or sale.  It's my understanding that simply purchasing digital currency is a "No" response.  

Here is what I found on the IRS Website.  I don't believe any of these situations refer to purchase alone, unless that is what "mining" means?  Thoughts please. 

When to check "Yes"

Normally, a taxpayer must check the "Yes" box if they:

Received digital assets as payment for property or services provided;

Transferred digital assets for free (without receiving any consideration) as a bona fide gift;

Received digital assets resulting from a reward or award;

Received new digital assets resulting from mining, staking and similar activities;

Received digital assets resulting from a hard fork (a branching of a cryptocurrency's blockchain that splits a single cryptocurrency into two);

Disposed of digital assets in exchange for property or services;

Disposed of a digital asset in exchange or trade for another digital asset;

Sold a digital asset; or

Otherwise disposed of any other financial interest in a digital asset.

 

[BulldogTom]

That is how I understand it as well.

Tom
Longview, TX

[Lion EA]

When to check ‘NO’

Normally, a taxpayer who merely owned digital assets during 2022 can check the "NO" box as long as they did not engage in any transactions involving digital assets during the year. They can also check the "NO" box if their activities were limited to one or more of the following:

• Holding digital assets in a wallet or account;
• Transferring digital assets from one wallet or account they own or control to another wallet or account they own or control; or
• Purchasing digital assets using U.S. or other real currency, including through electronic platforms such as PayPal and Venmo.