Final answer:
The basis of digital assets received as payment for goods and services is the fair market value in U.S. dollars at the time of receipt.
Step-by-step explanation:
The basis of digital assets received by a taxpayer as payment for goods and services is a. the fair market value of the digital assets in U.S. dollars as of the date of receipt. This means that the taxpayer should determine the value of the digital assets in U.S. dollars at the time they are received.
For example, if a taxpayer receives 1 Bitcoin as payment for a service, they would need to calculate the fair market value of that Bitcoin in U.S. dollars at the time of receiving it. The fair market value as of the date it is subsequently traded (option b) or the cost of the goods and services traded for the digital assets as of the date of receipt (option c) is not correct.
This value is used to determine the amount of income to report and is necessary for the calculation of any gain or loss when the digital asset is later sold or exchanged. When receiving digital assets in this manner, the taxpayer needs to establish and record the value of the digital currency on the date of the transaction to comply with tax regulations.