Transitional Guidance: Digital Assets Should Be Excluded in Determining if Form 8300 Must Be Filed

(Parker Tax Publishing January 2024)

The IRS issued an announcement informing businesses that for now, digital assets are not required to be included when determining whether a taxpayer engaged in a trade or business receives cash in excess of $10,000 in one transaction (or two or more related transactions) and therefore must report the payment on Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. The IRS provided this transitional guidance under Code Sec. 6050I until regulations are issued that provide additional information and procedures for reporting the receipt of digital assets. Announcement 2024-4.

Under Code Sec. 6050I(a), any person engaged in a trade or business who, in the course of that trade or business, receives cash in excess of $10,000 in one transaction (or two or more related transactions) must file an information return reporting the receipt of cash. Reg. Sec. 1.6050I-1(a) and (e) require that the return must be filed on Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, within 15 days of the receipt of the cash payment. Persons required to file Form 8300 must also furnish an annual written statement to each payer whose name is required to be set forth on the Form 8300.

Section 80603(b)(3) of the Infrastructure Investment and Jobs Act (Infrastructure Act) (Pub. L. 117-58) amended Code Sec. 6050I to add digital assets (as defined in Code Sec. 6045(g)(3)(D)) to the list of assets included in the definition of cash in Code Sec. 6050I(d). The amendment applies to returns required to be filed, and statements required to be furnished, after December 31, 2023. In August 2023, the IRS issued proposed regulations (REG-122793-19) that include rules clarifying the definition of the term digital assets found in Code Sec. 6045(g)(3)(D). The proposed regulations have not yet been finalized.

In Announcement 2024-4, the IRS stated that it intends to implement Section 80603(b)(3) of the Infrastructure Act by publishing regulations specifically addressing the application of Code Sec. 6050I to digital assets and by providing forms and instructions for reporting that address the inclusion of digital assets. Accordingly, until the IRS publishes regulations under Code Sec. 6050I to implement Section 80603(b)(3) of the Infrastructure Act, persons engaged in a trade or business who, in the course of that trade or business, receive digital assets or digital assets and other cash in one transaction (or two or more related transactions) will not be required to include those digital assets when determining whether cash received has a value in excess of the $10,000 reporting threshold for purposes of determining if reporting is required under Code Sec. 6050I with respect to those transactions.

Persons engaged in a trade or business who, in the course of that trade or business, receive cash (other than digital assets) in excess of $10,000 in one transaction (or two or more related transactions) must continue to file an information return under Code Sec. 6050I with respect to that cash received.

For a discussion of Form 8300, see Parker Tax ¶252,598.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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