Page 57 - Virtual Currencies

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Fileid: … tions/p525/2022/a/xml/cycle08/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
qualified settlement income, the reductions for to provide food to individuals eligible for help at its FMV in the first year it's your undisputed
the amount contributed to an eligible retirement under the program. possession.
plan, and the net amount.
Income averaging. For purposes of the in- Foreign currency transactions. If you have a Free tour. If you received a free tour from a
gain on a personal foreign currency transaction
travel agency for organizing a group of tourists,
come averaging rules that apply to an individual because of changes in exchange rates, you you must include its value in your income. Re-
engaged in a farming or fishing business, quali- don't have to include that gain in your income port the FMV of the tour on Schedule 1 (Form
fied settlement income is treated as attributable unless it's more than $200. If the gain is more 1040), line 8z, if you aren't in the trade or busi-
to a fishing business for the tax year in which it's than $200, report it as a capital gain. ness of organizing tours. You can't deduct your
received. See Schedule J (Form 1040) and its expenses in serving as the voluntary leader of
instructions for more information. Foster care providers. Generally, payment the group at the group's request. If you organize
you receive from a state, political subdivision, or tours as a trade or business, report the tour's
Fees for services. Include all fees for your a qualified foster care placement agency for value on Schedule C (Form 1040).
services in your income. Examples of these caring for a qualified foster individual in your
fees are amounts you receive for services you home is excluded from your income. However, Gambling winnings. You must include your
perform as: you must include in your income payment to the gambling winnings in your income on Schedule
• A corporate director; extent it's received for the care of more than 5 1 (Form 1040), line 8b. Winnings from fantasy
• An executor, administrator, or personal qualified foster individuals age 19 years or sports leagues are gambling winnings. If you
representative of an estate; older. itemize your deductions on Schedule A (Form
• A manager of a trade or business you op- A qualified foster individual is a person who: 1040), you can deduct gambling losses you had
erated before declaring chapter 11 bank- during the year, but only up to the amount of
ruptcy; 1. Is living in a foster family home; and your winnings. If you're in the trade or business
• A notary public; or 2. Was placed there by: of gambling, use Schedule C (Form 1040). For
• An election precinct official. tax years 2018 through 2025, professional gam-
If you aren't an employee and the fees a. An agency of a state or one of its polit- bling losses and expenses are limited to the
ical subdivisions, or
TIP for your services from a single payer in amount of your winnings.
the course of the payer's trade or busi- b. A qualified foster care placement Lotteries and raffles. Winnings from lot-
ness total $600 or more for the year, the payer agency. teries and raffles are gambling winnings. In ad-
should send you Form 1099-MISC. Difficulty-of-care payments. These are dition to cash winnings, you must include in
payments that are designated by the payer as your income the FMV of bonds, cars, houses,
Corporate director. Corporate director and other noncash prizes. However, the differ-
fees are self-employment income. Report these compensation for providing the additional care ence between the FMV and the cost of an oil
that is required for physically, mentally, or emo-
payments on Schedule C (Form 1040).
tionally handicapped qualified foster individuals. and gas lease obtained from the government
Personal representatives. All personal A state must determine that the additional com- through a lottery isn't includible in income.
representatives must include in their gross in- pensation is needed, and the care for which the Installment payments. Generally, if you
come fees paid to them from an estate. If you payments are made must be provided in the win a state lottery prize payable in installments,
aren't in the trade or business of being an exec- foster care provider's home in which the quali- you must include in your gross income the an-
utor (for instance, you're the executor of a fied foster individual was placed. nual payments and any amounts you receive
friend's or relative's estate), report these fees Certain Medicaid waiver payments are trea- designated as interest on the unpaid install-
on Schedule 1 (Form 1040), line 8z. If you're in ted as difficulty-of-care payments when re- ments. If you sell future lottery payments for a
the trade or business of being an executor, re- ceived by an individual care provider for caring lump sum, you must report the amount you re-
port these fees as self-employment income on for an eligible individual (whether related or un- ceive from the sale as ordinary income (on
Schedule C (Form 1040). The fee isn't includi- related) living in the provider's home. See No- Schedule 1 (Form 1040), line 8b) in the year
ble in income if it's waived. tice 2014-7, available at IRS.gov/irb/ you receive it.
2014-4_IRB#NOT-2014-7, and related ques-
Manager of trade or business for bank- tions and answers, available at IRS.gov/ Form W-2G. You may have received a
ruptcy estate. Include in your income all pay- Individuals/Certain-Medicaid-Waiver- Form W-2G showing the amount of your gam-
ments received from your bankruptcy estate for Payments-May-Be-Excludable-From-Income, bling winnings and any tax taken out of them.
managing or operating a trade or business that for more information. Include the amount from box 1 on Schedule 1
you operated before you filed for bankruptcy. You must include in your income diffi- (Form 1040), line 8b. Include the amount shown
Report this income on Schedule 1 (Form 1040), culty-of-care payments to the extent they're re- in box 4 on Form 1040 or 1040-SR, line 25c, as
line 8z. ceived for more than: federal income tax withheld.
Notary public. Report payments for these • 10 qualified foster individuals under age
services on Schedule C (Form 1040). These 19, or Gifts and inheritances. In most cases, prop-
payments aren't subject to self-employment tax. • Five qualified foster individuals age 19 or erty you receive as a gift, bequest, or inheri-
See the separate Instructions for Schedule SE older. tance isn't included in your income. However, if
(Form 1040) for details. Maintaining space in home. If you're property you receive this way later produces in-
come such as interest, dividends, or rents, that
Election precinct official. You should re- paid to maintain space in your home for emer- income is taxable to you. If property is given to
ceive a Form W-2 showing payments for serv- gency foster care, you must include the pay- a trust and the income from it is paid, credited,
ices performed as an election official or election ment in your income. or distributed to you, that income is also taxable
worker. Report these payments on line 1a of Reporting taxable payments. If you re- to you. If the gift, bequest, or inheritance is the
Form 1040 or 1040-SR. ceive payments that you must include in your income from the property, that income is taxa-
income and you're in business as a foster care ble to you.
Food program payments to daycare provid- provider, report the payments on Schedule C
ers. If you operate a daycare service and re- (Form 1040). See Pub. 587 to help you deter- Inherited pension or IRA. If you inherited
ceive payments under the Child and Adult Care mine the amount you can deduct for the use of a pension or an IRA, you may have to include
Food Program administered by the Department your home. part of the inherited amount in your income.
of Agriculture that aren't for your services, the See Survivors and Beneficiaries in Pub. 575 if
payments aren't included in your income in Found property. If you find and keep property you inherited a pension. See What if You Inherit
most cases. However, you must include in your that doesn't belong to you that has been lost or an IRA? in Pubs. 590-A and 590-B if you inheri-
income any part of the payments you don't use abandoned (treasure trove), it's taxable to you ted an IRA.

Page 34 Publication 525 (2022)