The state and local sales tax landscape is constantly shifting as the marketplace of goods and services evolves. Recently, there has been a series of changes related to states expanding their sales tax. First, states are expanding their jurisdiction to impose sales tax, i.e., increasing the number of people subject to tax through nexus. Second, states have attempted to expand the sales tax base by subjecting new transactions and services to tax.

When we think of digital assets, we usually think of cryptocurrency, Bitcoin, etc. Although, the definition of  “digital asset” does not appear in the Merriam Webster, Macmillan or Britannica dictionaries, it did appear in Free Dictionary.

The IRS directed partnerships to report capital accounts on the tax basis starting in 2020. In this article, I’ll address the prior rule, why the IRS wasn’t happy, the change they wanted, how to process the transition, and the need to maintain both the former capital account and the IRS-prescribed method.