US IRS Announces Temporary Relief Proposal for Centralized Exchange Users' Tax Regulations
Summary
- The United States Internal Revenue Service (IRS) has announced a temporary relief proposal to reduce the tax burden on centralized exchange users.
- The proposal addresses concerns about increased tax burdens due to the First-In, First-Out (FIFO) accounting method and allows flexibility in asset accounting methods until 2025.
- This measure supports exchange users in identifying specific units using tax software.
The United States Internal Revenue Service (IRS) has announced a temporary relief proposal for users of centralized exchanges (CEFI) regarding tax regulations.
According to a report by Bitcoin.com News on the 1st (local time), the IRS has unveiled a temporary relief proposal for centralized exchange users. This proposal addresses concerns raised in the final version of the Section 6045 escrow broker rules. The temporary relief was announced to address worries that in a bull market environment, if users sell their held virtual assets, the First-In, First-Out (FIFO) accounting method would apply, potentially increasing users' tax burdens if assets purchased at the lowest historical prices are considered sold.
Through this temporary relief, the IRS plans to support centralized exchange users in identifying specific units using tax software from January 1 to December 31, 2025.
Sehan Chandrasekera, Head of Tax Strategy at CoinTracker, explained, "In a bull market environment, the FIFO method of applying taxes by selling the first purchased assets can distort capital gains," adding, "The temporary implementation of flexible asset accounting measures for centralized exchange transactions until December 31, 2025, reduces the burden."
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