It appears that the U.S. Senate is moving closer to passing a $1 trillion infrastructure package recently after lawmakers from both parties came together and voted to clear a key procedural hurdle.

The measure would provide a massive injection of federal money for a range of public works programs, from roads and bridges to broadband Internet access, drinking water, and more. This occurred over this weekend in a rare showing of bipartisanship.

For those of us who are paying attention, especially for our Customers, there is a provision, tucked inside this massive infrastructure bill that would require tax reporting for transactions similar to securities. The measure seeks to ensure that details about digital transactions — such as purchase price, gains, and losses — are reported to the IRS, as one would normally do to provide accurate tax and/or income reports.

I was recently quoted in an article by Investment News “Digital Asset Proposal Puts Spotlight on Crypto Taxes” by Mark Schoeff Jr. (August 5, 2021).

When asked about the provision in the bipartisan $1 trillion infrastructure bill that would bolster tax enforcement surrounding transactions involving digital assets, that include cryptocurrencies, non-fungible tokens (NFT), and items like electronic baseball cards, etc. by ensuring that details about digital transactions — such as purchase price, gains, and losses — are reported to the IRS, much like that information for securities is captured on a Form 1099.

“Buying and selling cryptocurrencies can be a complicated process. This makes tracking it for tax purposes challenging. I doubt that a Customer of ours has ever received a 1099-K for a $480,000 sale of cryptocurrency that required 75,000 transactions.”

“It’s too easy for people to forget that these are taxable transactions,”

The digital-asset provision has been included in the infrastructure bill as a way to help pay for the package, which would upgrade the nation’s roads, bridges, water systems, and broadband access. The Senate is still debating the bill this week.

“Investors failing to pay tax they owe through cryptocurrency is a real problem, and I strongly support third-party reporting by exchanges where cryptocurrency is bought, sold, and traded,” Ron Wyden (Oregon), chairman of the Senate Finance Committee, said in a statement. “Our amendment makes clear that reporting does not apply to individuals developing blockchain technology and wallets.”

Although most financial advisers don’t execute crypto transactions, we have a role in educating our Customers about their tax implications. Advisers, as well as accountants and others helping clients, should ask them about their digital assets. We should remind their Customers that they need to be diligent when they sell cryptocurrencies and report those transactions accurately now that Congress is debating whether to strengthen reporting requirements.

“All of us in the ecosystem need to make sure people understand that there’s a compliance requirement. You have to report your transactions and recognize your gains AND your losses.”

We at Morris + D’Angelo know that it can be difficult to determine the cost basis of a digital asset sale or purchase as these technologies evolve.

If you need any clarification of what your Crypto Transactions all means and you wish to retain more of what you make and multiply your net worth while remaining tax compliant, contact us at Morris + D’Angelo. This is our Expertise!

Parts of this article are published from Investment News, by Mark Schoeff Jr. (August 5, 2021). © 2021 Daniel Morris, Morris + D’Angelo

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Daniel Morris
Daniel frequently provides Media Content via Workshops, Podcasts, and Printed Articles on topics like Bitcoin and Cryptocurrency, Wealth Preservation and Planning, Global Banking, and many other high-level financial topics that serve and demonstrate the Value of our Global Network that should be of interest to those who need Private High-Wealth Services.

If you would like Daniel to speak to you or your Professional Group and bring clarity about the new frontier of the new business tax law changes. Please contact us.

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