A relatively new issue that is coming up in a divorce is how to divide digital assets. These are non-fungible tokens (NFTs) like bitcoins. If the spouse who has been buying these digital assets reveals the assets as he or she is required to do according to the law, they can be identified and divided equally between the spouses if they were purchased with community property assets.
In too many cases, a spouse decides, “Hey. I’m going to throw $500 into Bitcoin.” They may not share that information with their spouse, thinking it is an immaterial amount. As a result, identifying the asset becomes a problem.
The two problems come up with NFTs:
- Valuation of the digital assets.
NFTs often increase or decrease by the hour, by the day, and by the month, so the valuation of digital currencies is very difficult.
Valuation of Digital Assets
This is a challenge, but there are active markets that can be analyzed to see what certain NFTs are being sold for so there is some transparency as far as valuation.
It is cumbersome to evaluate the tax consequences for the parties from digital assets. There are some uncharted waters, and no one really knows how it is going to be done.
With a traditional investment portfolio, with mutual funds and stocks, they can be divided tax-free, so the goal is to divide cryptocurrencies or digital assets tax-free.
Contact Heberger & Company An Accountancy Corporation
If you are in the midst of a divorce or contemplating a divorce and need assistance in dividing digital assets like NFTs cryptocurrencies, or other digital assets, contact us at Heberger & Company An Accountancy Corporation. We can help.