Gap in Crypto Gains Reporting
A study by the Internal Revenue Service (IRS) found that only between 32% and 56% of cryptocurrency users may be reporting gains to the IRS.
The IRS analyzed a total sample of over 221 million U.S. taxpayers using confidential taxpayer information for tax returns filed between 2013 and 2021. It has found that only 17.4 million individuals reported some form of cryptocurrency.
Digital Assets Considered as “Property”
Digital assets, as mandated by IRS Notice 2014-21, are treated as property for federal tax purposes. The sale or exchange of convertible virtual currency, or the use of convertible virtual currency to pay for goods or services in a real-world economy transaction, has tax consequences that may result in a tax liability.
The Solution
Beginning with transactions on or after January 1, 2025, the IRS requires brokers to report dispositions of digital assets for customers in certain sale or exchange transactions through Form 199-DA.
Treasury Decision 10000 ensures that taxpayers will receive statements that include information reported by brokers to IRS on Form 1099-DA, as published in the Federal Register in April 2026.
These statements aim to give taxpayers the confidence to report income from cryptocurrency sales through compliance efforts.
