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IRS final rule for taxing digital assets. On July 9, 2024, the IRS will publish its final rule "regarding information reporting and the determination of amount realized and basis for certain digital asset sales and exchanges. The final regulations require brokers to file information returns and furnish payee statements reporting gross proceeds and adjusted basis on dispositions of digital assets effected for customers in certain sale or exchange transactions. These final regulations also require real estate reporting persons to file information returns and furnish payee statements with respect to real estate purchasers who use digital assets to acquire real estate." This "public inspection" version is almost 400 pages long. I'm going to wait for some smart crypto lawyers to provide a summary. https://lnkd.in/g8yJC4De

If you read the headlines last week, you may have thought that the IRS delayed new crypto tax reporting rules for individual and business filers. They didn't! We break it all down in the latest episode of TNF Takes by The Network Firm. https://lnkd.in/gDv5sw2b

What does IRS Form 1099-DA mean for you? If you trade in digital assets, like crypto or NFTs, you’ll be receiving Form 1099-DA from your broker starting in 2026 for the 2025 tax year. This new form is a step toward enhancing transparency in the digital asset space, simplifying how investors and brokers report transactions to the IRS. While the draft of Form 1099-DA simplifies some aspects of reporting digital assets, it’s clear that we’re at the beginning of a long process. Digital assets continue to evolve, and so too must the IRS’s approach to tax reporting. As we move closer to 2025, we encourage you to stay updated on any additional changes to Form 1099-DA and ensure that your digital asset transactions are reported accurately. If you’re unsure of how these changes will affect you or your business, it’s best to seek professional guidance.

Welcome to Wall Street BTC (Last Minute Gift From Biden) By?collecting?more information from brokers,?the owner of a digital asset who engages in DeFi transactions will?receive a?Form?1099 from brokers and?be?reminded?that those?transactions are?taxable, thereby reducing the number of inadvertent errors or noncompliance on the taxpayer’s?federal income tax returns and saving taxpayers time and money during the filing process. “These regulations?will?help?ensure that all taxpayers play by the same set of rules?and have access to the information they need to file their taxes accurately,” said?Aviva Aron-Dine, Performing the Duties of Assistant Secretary for Tax Policy.?“Aligning tax reporting?requirements for?digital assets with reporting?for?other assets?will?make filing easier?and cheaper?for compliant taxpayers?while also?helping?close the tax gap." The final regulations?come after Treasury?published final regulations addressing reporting requirements primarily for custodial brokers?earlier this year.?The final regulations?do not treat operators of digital protocols or developers of protocol software as brokers?and modify the?proposed regulations in ways that limit burdens on brokers while ensuring taxpayers and the IRS receive the information they need #BTC #Bitcoin #crypto https://lnkd.in/gRf9aX6N

The IRS’s expanded rules redefine DeFi platforms as brokers, sparking a lawsuit over privacy concerns and potential innovation stifling in the digital asset sector. https://lnkd.in/ekiu5WsT

Some more thoughts on the draft 1099-DA that the IRS released on April 19: 1. This is a lot of information for brokers to collect. There's going to be a large administrative burden for brokers to comply. 2. There is a box in the top right to check what kind of broker you are. Looks like unhosted wallets is one of them. This is a big yikes for innovation in the U.S. It feels like this is more of a KYC play than a tax reporting play. 3. Box 1i is "wash sale disallowed." This is interesting given the positition that generally crypto assets aren't subject to wash sale rules. My guess is maybe its for the recently approved BTC ETFs. Not entirely sure. 4. Box 11b asks for digital asset address. This is basically going to dox a lot of public addresses. 5. Box 11a asks for transaction ID as if brokers will need to provide a transaction hash for each sale. 6. Boxes 12a-d are for reporting transfers even though the IRS has not released any guidance when this will be required. 7. All this to say is this is a draft form 1099-DA and the IRS is requesting comments. There is a 60 day comment period. There is a chance that the final form will look different from the draft form.

With Notice 2025-7, the IRS provided relief for taxpayers navigating the new crypto regulations effective January 1, 2025. This Notice enables taxpayers to manage their specific identification (spec-ID) lot identifications for 2025 independently. This offers a solution for situations where brokers/exchanges are not prepared to handle this data, ensuring that taxpayers are not forced to use FIFO. Brokers, in turn, must confirm with customers what "adequately identifies" the applicable lots. Taxpayers now have the option to identify crypto units at the time of each sale or to establish a consistent method (FIFO, LIFO, HIFO) for all their sales. Brokers are mandated to track this information starting January 1, 2026, aligning with the initial timeline.

IRS Shares New Crypto Tax Form, Invites Industry Input https://buff.ly/47cyGWn #irs #taxplanning #irstips #irsbusinesssolutions #accounting #smallbusiness #cpafirm #cryptotaxrules #crypto #reportingtaxes #Bidenadministration #IRS #1099-DA #onlinewallet

The Internal Revenue Service (IRS) has finalized a new tax form for crypto brokers. Reporting will commence in 2025. As we welcome the new year, custodial crypto brokers like Coinbase, Gemini, and Kraken must report the gross proceeds from their clients' crypto transactions using the revised Form 1099-DA. The IRS indicates that these forms will eventually be sent to taxpayers in 2026, to include the relevant cost basis for the respective transactions. By mandating custodial brokers to provide clear and concise tax forms, calculating crypto taxes should become less confusing for investors and assist accountants in streamlining their processes. Earlier this year, IRS Commissioner Danny Werfel emphasized the importance of the upcoming 1099-DA draft form, expressing that it would enhance clarity for taxpayers, enabling them to report their digital asset transactions accurately. At this point, the requirement will apply solely to centralized brokers and will not extend to on-chain decentralized protocols like Uniswap (Ethereum) or Raydium (Solana); a period for public comments regarding DeFi will commence in 2025. This reporting change by the IRS arrives at a notable time, now under a pro-crypto administration and a proactive Congress that seeks to prioritize crypto legislation in 2025, potentially introducing a new or complementary tax code. A draft copy of Form 1099-DA is available on the IRS page, https://t.ly/3ADlf As always, consult a tax professional.

If you've sold crypto, received it as payment, or have had other digital asset transactions, it's important to accurately report them on your tax return. The IRS is now focusing on crypto and digital transactions when reviewing tax returns, so you don't want to become a target. Stay ahead of the game by making sure all your transactions are properly reported. #cryptotax #digitaltransactions #taxreturn #IRS