As published in the JOURNAL OF TAXATION OF FINANCIAL PRODUCTS VOLUME 18 ISSUE 4 2022.
© 2019 CCH Incorporated and its affiliates. All rights reserved. Reprinted with permission.
On November 15, 2021, the Infrastructure Investment and Jobs Act (P.L. 117- 58, the “Act”) was signed into law by President Biden. Act Section 80603 (the “Provision”) subjects digital assets to gross proceeds and cost basis reporting by brokers under Code Sec. 6045 and to IRS cash reporting on Form 8300 under Code Sec. 6050I. The new reporting obligations outlined in this column stem in part from prior IRS guidance (Notice 2014-21) generally treating virtual currencies as property for federal income tax purposes, giving rise to taxable gains and losses upon dispositions.1 This column discusses the Provision and frames some concerns. Note that the IRS will need to develop and promulgate regulations and updated tax forms. Brokers responsible for tax reporting will need time to prepare for tax reporting and will be challenged by applicable deadlines. As is often the case, additional questions and controversies are likely to arise in connection with implementation.
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