Source: IR-2024-178, June 28, 2024.
The views expressed in this blog are the author’s personal opinions and do not constitute professional advice.
Transitional relief
Notice 2024-56 PDF provides general transitional relief from reporting penalties and backup withholding (Emphasis by Zaher Fallahi) for any broker who does not timely and accurately file information returns and furnish payee statements for sales and exchanges of digital assets during calendar year 2025, provided that the broker makes a good faith effort to comply with the reporting obligations. Additionally, the notice provides more limited relief from backup withholding for certain sales of digital assets during 2026 for brokers using the IRS’s TIN-matching system in place of certified TINs. Finally, the Notice also provides backup withholding relief for exchanges of digital assets in return for specified NFTs and real property and for certain sales effected by PDAPs.
Delay on information reporting for certain transactions until future guidance is issued
Notice 2024-57 PDF informs brokers that until the U.S. Treasury Department and the IRS issue further guidance, brokers will not have to file (1) information returns (Emphasis by Zaher Fallahi) or (2) furnish payee statements on digital asset sales and (3) exchanges for the following six types of transactions:
- Wrapping and unwrapping transactions,
- Liquidity provider transactions,
- Staking transactions,
- Transactions described by digital asset market participants as lending of digital assets,
- Transactions described by digital asset market participants as short sales of digital assets, and
- Notional principal contract transactions.
Transition from universal or multi-wallet approach to allocating basis in digital assets to wallet by wallet or account by account approach. Revenue Procedure 2024-28 PDF generally permits taxpayers to rely on any reasonable allocation of units of unused basis to wallets or accounts that hold the same number of remaining digital asset units based on the taxpayers’ records of unused bases and remaining units in those wallets or accounts.
End of IRS Material
Zaher Fallahi, Tax Attorney, CPA, advises taxpayers nationwide with cryptocurrency tax, including stolen digital assets, Anti-Money Laundering Compliance, Foreign Gift & Inheritance. Tel.: (310) 719-1040, (714) 546-4272 and (877) 687-7558 toll free nationwide. Websites: zflegal.com and zfcpa.com E-mail taxattorney@zfcpa.com