Wan Nashrul Haqeem Bin Wan Kamal’s Post

A report published yesterday indicates more could be done to enforce tax compliance among crypto users, and that's where IVIX can help. Accounting Today's Mike Cohn recently discussed crypto enforcement with Don Fort, who noted, "There's a lot of people that can trace, but identifying who the people are — short of whistleblowers and John Doe summonses — how do you really find out who these people are? I think that's one of the more valuable areas that we're working in now." #tax #ai https://lnkd.in/gvTyPkJi

Starting in 2025, the IRS will implement updated rules for cryptocurrency taxation, aiming to enhance transparency and compliance in the digital asset market. Here are the critical changes and implications: --- ### \*\*New Reporting Requirements\*\* 1. \*\*Form 1099-DA\*\*: - Brokers must report digital asset transactions, including sales and trades, to both taxpayers and the IRS. - The form will detail the \*\*cost basis\*\* and \*\*sale proceeds\*\* for covered transactions. 2. \*\*Who is a Broker?\*\* - Custodial platforms are classified as brokers, while decentralized finance \(DeFi\) exchanges and unhosted wallets are excluded. --- ### \*\*Tax Classification & Events\*\* 3. \*\*Digital Assets as Property\*\*: - Cryptocurrencies remain classified as property, similar to stocks or real estate, not as currency. - Taxable events include selling, exchanging, or purchasing goods/services using crypto. 4. \*\*Effective Timeline\*\*: - These rules apply to 2025 transactions, with reporting beginning in 2026. --- ### \*\*Additional Compliance Measures\*\* 5. \*\*Default Accounting Method\*\*: - Taxpayers can select their accounting method for crypto sales. - FIFO \(First-In-First-Out\) will be the default if no method is chosen. 6. \*\*Tax Documentation\*\*: - Exchanges will require customers to complete forms \(W-9 for U.S. residents or W-8 for non-residents\) to certify tax status. - Accounts without proper certification may face \*\*24% backup withholding\*\* on proceeds. --- ### \*\*Implications for Investors\*\* 7. \*\*Crackdown on Tax Evasion\*\*: - These rules aim to curb evasion by providing clearer guidelines for tax reporting. 8. \*\*Increased Complexity\*\*: - Retail investors face higher administrative burdens in tracking and reporting transactions. 9. \*\*Potential Policy Changes\*\*: - Shifts in administration or legislative priorities could impact the implementation timeline. --- \*\*Takeaway\*\*: These changes highlight the IRS's commitment to regulating the cryptocurrency market. Investors should prepare by organizing transaction records, understanding their reporting obligations, and consulting tax professionals to ensure compliance. https://lnkd.in/g_dQjeWA

Starting in 2025, the IRS will implement updated rules for cryptocurrency taxation, aiming to enhance transparency and compliance in the digital asset market. Here are the critical changes and implications: --- ### \*\*New Reporting Requirements\*\* 1. \*\*Form 1099-DA\*\*: - Brokers must report digital asset transactions, including sales and trades, to both taxpayers and the IRS. - The form will detail the \*\*cost basis\*\* and \*\*sale proceeds\*\* for covered transactions. 2. \*\*Who is a Broker?\*\* - Custodial platforms are classified as brokers, while decentralized finance \(DeFi\) exchanges and unhosted wallets are excluded. --- ### \*\*Tax Classification & Events\*\* 3. \*\*Digital Assets as Property\*\*: - Cryptocurrencies remain classified as property, similar to stocks or real estate, not as currency. - Taxable events include selling, exchanging, or purchasing goods/services using crypto. 4. \*\*Effective Timeline\*\*: - These rules apply to 2025 transactions, with reporting beginning in 2026. --- ### \*\*Additional Compliance Measures\*\* 5. \*\*Default Accounting Method\*\*: - Taxpayers can select their accounting method for crypto sales. - FIFO \(First-In-First-Out\) will be the default if no method is chosen. 6. \*\*Tax Documentation\*\*: - Exchanges will require customers to complete forms \(W-9 for U.S. residents or W-8 for non-residents\) to certify tax status. - Accounts without proper certification may face \*\*24% backup withholding\*\* on proceeds. --- ### \*\*Implications for Investors\*\* 7. \*\*Crackdown on Tax Evasion\*\*: - These rules aim to curb evasion by providing clearer guidelines for tax reporting. 8. \*\*Increased Complexity\*\*: - Retail investors face higher administrative burdens in tracking and reporting transactions. 9. \*\*Potential Policy Changes\*\*: - Shifts in administration or legislative priorities could impact the implementation timeline. --- \*\*Takeaway\*\*: These changes highlight the IRS's commitment to regulating the cryptocurrency market. Investors should prepare by organizing transaction records, understanding their reporting obligations, and consulting tax professionals to ensure compliance. https://lnkd.in/e-GfETbG

The Internal Revenue Service previewed a draft version of the Form 1099-DA for crypto brokers reporting on the proceeds of digital asset transactions to their customers. The form is the result of the bipartisan Infrastructure and Investment Jobs Act signed into law in 2021, which classifies crypto exchanges and trading platforms as brokers and requires them to report on their customer's gains and losses to the IRS every year starting with tax year 2025. Customers and the IRS would start receiving the forms in time for the 2026 tax season. The IRS issued proposed regulations last year on the new requirements. Crypto brokers were supposed to start tracking the transactions last year. Under the proposed regulations, a broker providing custodial services for digital asset would be required to provide adjusted basis reporting for sales of digital assets effected on or after Jan. 1, 2026, if the digital asset is acquired and continuously held by that broker in the customer's account on or after Jan. 1, 2023.

Is your business ready for the next big shift in crypto tax compliance? Is decentralization dying?  Or maybe it is already dead…? The OECD's Crypto-Asset Reporting Framework (CARF) is about to change the game for crypto exchanges, wallet providers, and even decentralized platforms. If you're in the crypto space, this will dramatically impact your compliance requirements—are you prepared? What does CARF mean for businesses? The Crypto-Asset Reporting Framework (CARF) is bringing much-needed transparency to crypto transactions. Released in October 2024, the OECD’s official XML format is now live, helping crypto service providers (exchanges, wallets, brokers) report transactions to tax authorities by 2027. What you need to know: - Reporting Obligations: Like banks, crypto providers must report transfers, sales, and exchanges of crypto-assets. - Global Data Sharing: National tax authorities will exchange this data globally, ensuring cross-border crypto activities are fully transparent and taxed fairly. - CRS Amendments: Crypto assets are now integrated into the global tax system under the Common Reporting Standard (CRS). Who’s Affected: This includes exchanges, wallet providers, and certain decentralized platforms. How does DAC 8 fit in? The EU’s DAC 8 expands reporting obligations for crypto-asset service providers within the EU. By aligning with CARF, DAC 8 strengthens cross-border tax data sharing within the EU, ensuring consistency across both traditional and crypto-assets. Why should we care? CARF and DAC 8 aren’t just about compliance—they’re about building trust in the crypto space. Increased transparency means a more secure and trustworthy environment for businesses and investors, bringing crypto into the mainstream. Although full exchanges won’t happen until 2027, now is the time to prepare your business for these new standards. How might this affect your business or how to stay compliant? #CryptoTax #GlobalCompliance #OECD #CryptoReporting #TaxUpdates

IRD honing-in on Crypto activity   The IRD recently released a statement on ramping up audit activity in the crypto space. Please see our short summary https://lnkd.in/g_QEBi_3 on tax issues surrounding crypto.   How we assisted a client through a crypto disclosure with Inland Revenue.   We worked with a client who undertook crypto as a hobby outside of their main employment. The crypto market had flourished, our client rode the wave and over a period traded significantly. We looked at the entire portfolio and transactions, provided our view on the tax treatment in respective periods and engaged Inland Revenue’s crypto team which led to a Voluntary Disclosure. Our client was very pleased with the outcome as it provided clarity to their tax position, saved them a significant amount on penalties and interest cost. If you would like to have a chat on your crypto activity, please reach out to Serjit S. or Michelle Turner. Mike Atkinson; Aaron Wallace; Matthew Bellingham; Niketa Naran; Ellie Williams; Jody Gilfillan; Rachel Bradburn; Kelvin Sam; Nick Savill

Our tax team has just published a comprehensive article on navigating the complexities of cryptocurrency taxation. Whether you’re an individual investor or a business dealing with digital assets, our expert insights can help you stay compliant. For tailored advise and support, do not hesitate to reach out to our tax team.

Cryptocurrency attains higher heights: IRS Shares New Crypto Tax Form, Invites Industry Input Quick summary: The IRS has revised its crypto brokerage tax form, removing the requirement to provide digital wallet addresses and other details. Form 1099-DA is expected to be partially implemented in 2025. The IRS has updated the draft of its crypto tax form, 1099-DA, for crypto brokerage accounts. Ji Kim, Head of Global Policy at the Crypto Council for Innovation, noted on social media that the updated form, which brokers will start using in 2025, no longer requires wallet addresses, transaction IDs, or acquisition times. These changes are part of the revised draft from August 8, with the form expected to be partially implemented in 2025 to track digital asset transactions. The IRS and the U.S. Department of the Treasury first introduced the crypto brokerage tax form in August 2023. Early drafts required filers to include a digital wallet address and indicate if assets were a "non-covered security." However, the crypto industry raised concerns about privacy and the potential impact on the decentralized finance sector. "The new Form 1099-DA will assist taxpayers in navigating the complexities of digital assets," said IRS Digital Asset Initiative Directors Raj Mukherjee and Seth Wilks in an email. "It complements the recently released 6045 broker regulations and allows taxpayers to report digital asset gains and losses starting in the 2025 tax year. This is a significant step in improving digital asset reporting, making the process easier and clearer." The public has 30 days to submit comments on the proposed 1099-DA.

⚠️ Changes to Cost Basis Rules in 2025 ⚠️ Beginning January 2025, investors must be aware of significant, and likely ongoing, changes to cryptocurrency tax regulations. Here’s what you need to know in a nutshell: 🔍 Form 1099-DA: All U.S. crypto exchanges must track your transactions, beginning Jan. 1, 2025, and report this information on Form 1099-DA—a new tax form created specifically for digital assets. 💼 Universal vs. Wallet-by-Wallet Accounting: Prior to 2025, investors could use the universal accounting method to calculate cost basis. But beginning Jan. 1, 2025, investors must use a wallet-by-wallet method instead. 🔀 Transferring Crypto: When you transfer stock from one broker to another, the brokers communicate with each other, keeping records of your initial cost basis and holding period. Eventually, crypto will use a similar system, making it much easier to prepare your own crypto taxes. However, in the meantime, investors must continue tracking their own self-transfers to ensure accurate cost basis. ⏰ Time to Catch Up: Now is the time to catch up on prior-year crypto taxes. For one thing, it will be impossible to prepare this year’s taxes otherwise. For another, it’s best to get everything in order BEFORE the IRS starts making an example of non-compliant taxpayers. ❓ Changing Regulations: We expect that regulations will continue to evolve under a relatively crypto-friendly Trump administration. We advise investors to keep a close eye on crypto tax news and to seek professional tax advice. Don’t forget that you can extend your tax deadline to avoid late filing penalties. ------- Check out this Gordon Law Group article for more detail on how to calculate your cost basis for crypto. It's a lot more complicated than most people realize, so don't wait until the last minute to start your taxes! https://lnkd.in/ga6mfqKg