Deferral of Broker Reporting of Digital Asset Sales

The Infrastructure Investment and Jobs Act of 2021 requires brokers to report proceeds from the sale of digital assets (such as Bitcoin and other virtual currencies) on an information return similar to Form 1099-B. This reporting requirement was supposed to take effect on January 1, 2023, and for digital assets acquired on or after January 1, 2023, the report was also required to include the basis of the digital assets sold.

On December 23, 2022, the IRS issued Announcement 2023-2, which deferred the effective date of the new reporting requirement for brokers until final regulations are issued by the Treasury Department. Therefore, the new requirement will not apply to the 2023 tax year.

Even though the reporting requirement for brokers has been delayed, taxpayers must still report all taxable transactions from digital assets on their income tax returns, and individual taxpayers must still answer the yes/no question regarding digital assets, which appears on Form 1040.

We will discuss considerations related to digital assets in our upcoming seminars in January. If you are not already registered, register here.