WASHINGTON—Treasury and the IRS have released proposed regulations on reporting by brokers for sales or exchanges of digital assets.
The proposed regulations aim to align tax reporting on digital assets with tax reporting on other financial assets, according to Forbes.
The regulations cover a range of digital asset issues where there have been questions, including defining brokers and requiring the use of the specific identification method under Sec.1012, for calculating the basis of digital assets. The proposed regulations concern Federal tax laws under the Internal Revenue Code only, and do not include any regulations proposed by other government agencies, Forbes explained.
“The IRS currently requires crypto users to report on their tax returns any digital asset activities, including trading cryptocurrencies. The proposed regulations signal much-needed and anticipated guidance regarding income taxation and reporting of digital asset transactions,” Forbes said.
A public hearing has been scheduled for Nov. 7 to discuss the proposed regulations.
The Definition
According to the proposed regulations, the definition of a broker for purposes of section 6045, includes digital asset trading platforms; digital asset payment processors; certain digital hosted wallet providers; and persons who regularly offer to redeem digital assets that were created or issued by that person. The proposed regulations also seek to clarify the definition of broker for purposes of Sec. 6045, which includes digital asset trading platforms, digital asset payment processors; and persons who regularly offer to redeem digital assets that were created or issued by that person, Forbes said.
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