'We need crypto tax management to get easier, not harder.' Opinion thebitcoincpa
for centralized crypto exchanges, effectively turning digital assets into securities for purposes of the Section 6045 reporting requirement. Stock trading firms issue tax forms 1099-Bs with sales of securities and capital gains and losses, so centralized exchanges will do the same thing for crypto trades on the new Form 1099-DA. Cash App and Robinhood Crypto, for example, have already been issuing crypto trades on 1099-Bs for several years..
Under the new rules, Alice would receive seven 1099-DAs in addition to her own universal calculation. Alice is no longer solely responsible for her crypto tax calculations and instead has eight parties, including herself, in on the calculation exercise. Bob and Alice have run headfirst into some of the numerous 1099-DA pitfalls. Now they must go through a rigorous exercise to reconcile all the 1099-DAs with their own universal calculation to double-check the exchanges correctly reported information. The challenge of managing crypto taxes just got magnified. In the absence of a thorough reconciliation and cross-checking exercise, taxpayers will otherwise double count and/or omit cost basis and therefore understate or overstate tax liabilities.
Cost-basis tracking on a per-wallet and exchange basis would help the reconciliation process but doesn’t come without its own issues. Several crypto tax software providers, such as Cointracker and Bitwave, are rolling out per-wallet and exchange tracking and some already had these features.
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