The Infrastructure Act passed by the U.S. Congress in 2021 brought cryptocurrency exchanges under the controversial “broker” definition and subjected them to the IRS information reporting regime. As a result, starting January 1, cryptocurrency exchanges will be required to report their customers’ annual cryptocurrency gains and losses to the Internal Revenue Service, similar to stock brokerages. The Treasury is crafting regulations related to the Infrastructure Act. Regulations (commonly referred to as Regs) interpret legislation and give specific directions on how to comply with the law. As a part of the Regs, the IRS is reportedly working on introducing a brand new tax form called Form 1099-DA for exchanges to capture individual annual cryptocurrency activity subject to taxation. The draft Regs are expected to come out in the next coming months, and for now the specifics of the form and the information it will capture are unknown. If adopted, exchanges will use the new form to report your cryptocurrency gains and losses to the IRS.
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