chriso on Nostr: There's changes coming to your tax reporting if you live in the USA. Starting in 2025 ...

There's changes coming to your tax reporting if you live in the USA. Starting in 2025 (returns filed in 2026), you will start seeing form 1099-DA's reporting the sales you have had. There are exceptions that will give the brokers another year to get in compliance, but you should give consideration to what your cost in your digital assets are if you haven't previously done so.
I will continue to note on this subject when I find information that might be useful. Feel free to ask questions if you have any.

Also I tried to note this using Highlighter.com but don't think it worked. Apparently I don't know how to use Hightlighter....
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IRS
Official Speaks on Final Digital Asset Regs

By Tim Shaw, Checkpoint

An IRS official shared preliminary
information on new digital asset tax reporting rules
and related guidance Friday afternoon with an audience of tax practitioners as
the regs were publicly announced.

The last panel of the New York
University School of Professional Studies 16th Annual Tax
Controversy Forum in Times Square, New York, began around 4 pm ET June 28 and
delved into compliance issues tax practitioners face when working with digital
asset clients. On the panel representing the Treasury Department was Trisha
Turner, senior advisor at the IRS Office of the Digital Assets Initiative.

During the presentation, Turner
notified attendees that the IRS was about to issue the finalized version of
digital asset reporting regs proposed last August that
implemented crypto-related provisions of the Infrastructure Investment and Jobs
Act (PL 117-58). The provisions
were delayed while the IRS worked to solicit input from industry stakeholders.

As promised, the regs (TD 10000) hit the Federal Register
minutes later, prompting audience members to scramble to their phones as the
IRS circulated a news release (IR
2024-178). The regs span
over 360 pages and reflect feedback across 44,000 submitted comments, as well
as a public rulemaking hearing
held in November.

"The final regulations require
gross proceeds reports for transactions taking place on or after January 1,
2025, [and] basis reporting by some brokers for transactions beginning January
1, 2026," said Turner. "At the same time, Treasury and the IRS are
issuing two notices which generally provide relief from failure to file and
failure to furnish penalties for 2025 transactions if the broker makes the
good-faith effort to file and furnish accurate" Forms 1099-DA, Digital Asset
Proceeds from Broker Transactions, "in a timely
manner." The notices "contain backup withholding relief for 2025 and
2026 transactions," she said.

Other panelists were asked for
reactions to the announcement by moderator Michelle Schwerin of Neill Schwerin
Boxerman PC, although no one at the time had gotten the chance to digest the
regs.

Latham & Watkins Partner Brian
McManus, providing his immediate reaction to the applicability date, said this
means that "about a year from now, there are going to be a lot of 1099s in
the system that are dealing with the extent that people have not been filing
over the course of the past several years." He added that the
"flood" of information returns will be riddled with incorrect
information. "There's going to be a lot of challenges" for brokers,
said McManus.

In response to McManus, Larry
Campagna — managing shareholder at Chamberlain, Hrdlicka, White, Williams &
Aughtry PC — said the remainder of 2024 is an opportunity for practitioners to
meet with clients "to anticipate what's going to come in 2025 and
2026," or "at least get them to make sure the 2023 and 2024 returns
were correct." Taxpayers should "go into the new reporting period
with their basis known," said Campagna.

Barbara Kaplan, a Greenberg Traurig
shareholder, agreed now is a good time to "sit down and plan your
strategy" for obtaining information before the rules take effect.

Continuing with how the final regs
addressed the "broad definition" of a digital asset broker in the
proposed rules, Turner said the final regs "only apply to brokers that
take possession of the digital assets." She explained that this includes
certain digital asset wallet providers, kiosks, and processors of digital asset
payments, or PDAPs.

Regarding non-custodial brokers,
meaning those that do not take possession of digital assets, Turner said that
Treasury and the IRS "need more time to study these industry participants
and the transactions they facilitate" before finalizing those reporting
rules. Also reserved are rules for foreign brokers, which will be covered in
"future regulations" to coincide with the Organization for Economic
Cooperation and Development's Crypto Asset Reporting Framework, commonly
referred to as CARF.

The final regs also omit a finalized
Form 1099-DA, the information return that will be used for reporting digital
asset transactions. A draft was recently
released, and Turner said there will be a 30-day comment period focused on
improving the form.

She declined to provide a specific
date for when the comment period will begin, but assured it is "going to
be coming up shortly."

Document Title:IRS Official Speaks on Final Digital Asset
Regs (07/02/2024)

Checkpoint Source:Federal Tax Updates

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