AICPA makes recommendations for digital asset transactions regulations

March 15, 2024

The American Institute of CPAs (AICPA) has submitted a letter to the US Treasury and Internal Revenue Service (IRS) providing recommendations for regulations that deal with gross proceeds and basis reporting by brokers, as well as determination of amount realised and basis for digital asset transactions. The AICPA recommends that Treasury and the IRS clarify the meaning of important terms and certain examples within the section 6045 proposed regulations.

AICPA’s recommendations include the following:

Clarify terminology, such as using either “retailer” or “merchant” consistently throughout the regulations.

Define important terms such as “digital representation of value,” “cryptographically secured distributed ledger,” and “any similar technology” – all of which are used to define what a “digital asset” is.

Clarify definitions and certain examples of when someone is considered a “broker” of digital assets.

Modify and clarify the definition of digital asset payment processor.

Clarify certain examples to reflect the rules intended to be illustrated and provide helpful guidance to interpret these complex rules.

Clarify an example to address additional facts that can exist in the transfer of a digital assets such as the transferor receiving “change” (generally referred to as UTXO).

Commenting on this, AICPA tax policy & advocacy senior manager, Peter Mills, said: “IRS guidance and regulations have not yet caught up with the wide range of digital asset issues we are seeing today.

“It is important for the government to provide clear guidance so that taxpayers and tax professionals can understand and comply with their reporting obligations. AICPA’s recommendations will help ensure that final regulations, when issued, will be clear and helpful.”

[The Accountant Online]