Crypto Advisors Highlight Tax Preparation Strategies for Digital Assets
In a recent discussion on tax planning for crypto trades, Bryan Courchesne from DAIM emphasized the complexities investors face with cryptocurrency taxation. Key points include:
- Crypto is exempt from wash-sale rules, allowing efficient tax-loss harvesting.
- Direct asset swaps (e.g., converting BTC to ETH) can occur without cash sales.
- Tracking costs across multiple platforms is challenging, particularly when transferring assets between exchanges.
- Decentralized exchanges (DEXs) do not provide tax forms, making it crucial for users to log all transactions accurately.
- Missed transactions could lead to IRS scrutiny or lost deductions.
To prepare for tax season, investors are advised to:
- Utilize crypto tax software and verify its accuracy.
- Consult with crypto tax specialists or advisors.
- Download transaction logs for cost basis calculations.
Additionally, institutional crypto inflows reached $35 billion, and the treatment of crypto differs from equities/bonds in tax reporting. Starting January 2025, wallet-level cost basis reporting will be mandatory, and Form 1099-DA will be introduced in 2026.
Other notable developments include:
- BBVA advises wealthy clients to allocate 3-7% of their portfolio to bitcoin.
- The U.S. Senate has passed the Genius Act, facilitating stablecoin adoption.
- Thailand will exempt capital gains on crypto investments for five years.
- CoinDesk Overnight Rates are being launched to support stablecoin money markets based on Aave.