I'm not a CPA, but this may not be correct. Both AI Gemini and Grok say basically the same thing:
IRS Guidance on Reporting RequirementThe IRS has consistently stated that taxpayers must report all digital asset transactions, regardless of whether they result in a gain or loss:
- From the IRS website: "If you have digital asset transactions, you must report them whether or not they result in a taxable gain or loss."
- From IRS FAQs on digital asset transactions: Taxpayers must report income, gain, or loss from all taxable transactions involving virtual currency (including cryptocurrency and stablecoins) on their federal income tax return, even if no payee statement (like a Form 1099) is received.
- From IRS Notice 2014-21 (the foundational guidance treating virtual currency as property): General property tax principles apply, so dispositions (e.g., using crypto to buy goods or services) trigger gain/loss recognition.
- Reporting occurs on Form 8949 (Sales and Other Dispositions of Capital Assets) and Schedule D (Capital Gains and Losses) of your Form 1040. Even if the gain/loss is zero (e.g., due to basis equaling the fair market value at disposition), the transaction must be accounted for to comply with the requirement to report all dispositions.
In summary, while IRC § 6045 mandates broker reporting of proceeds (which helps the IRS track transactions), the individual taxpayer's obligation to report dispositions—even with no profit—arises from the property treatment under IRC §§ 1001 and 61, as clarified by IRS guidance. Failing to report can lead to penalties, even if no tax is owed.
