Holders and issuers of cryptocurrency such as Bitcoin, Ethereum and non-fungible tokens (“NFTs”) have been made such loud cries for legitimacy that they have now become the target of the IRS. For the first time, the IRS will require owners of such assets to declare whether they own cryptocurrency by checking a box on their tax returns. Cryptocurrency is clearly an asset and therefore is subject to equitable distribution in a divorce. But, what kind of asset is it and can it be valued?
The United States Federal government places cryptocurrency in the category of a stock or commodity depending on how it is issued. Nonfungible Tokens, tied to visual art and at times coming with a tangible component, like music or admission to an event is also an asset. NFTs in the form of visual art have sold for millions of dollars. In October 2021, an NFT called Cryptopunk sold for $530 Million Dollars. This is clearly a link between the computer world and real world that cannot be ignored.
It is important to investigate whether your spouse owns cryptocurrency because it has become a real world asset subject to taxation by the IRS and therefore fair game in a divorce proceeding for division of assets as well as for the calculation of child support. If you are interested in a divorce consultation, contact Attorney Diana Mohyi who is licensed in Michigan & New York.