IRS Says Protocol Upgrade Is Not Taxable Event
The IRS said that upgrading the protocols of cryptocurrency will not result in taxable gain or loss or gross income to the cryptocurrency holder. Such an upgrade changes a blockchain’s consensus mechanism for adding new blocks of transactions. To holders of the cryptocurrency, these additions provide block rewards. However, the IRS found that the upgrade does not lead to any gain, loss or accession to wealth on a taxpayer’s existing holdings of the cryptocurrency.
IRS Will Release Guidance on Partnerships’ Monetization of Energy Credits
The IRS will release guidance on how partnerships can monetize clean energy tax credits provided in the Inflation Reduction Act. The guidance is related to the treatment of partnerships that wish to buy and sell the tax-and-climate law’s clean energy credits. Partnerships are able to claim a direct pay regime when the credit is treated as a refund for three credits: the clean hydrogen credit, the carbon capture and sequestration credit, and the advanced manufacturing credit.
EU to Finalize Crypto-Asset Tax Reporting Rule
European Union finance ministers plan to finalize a tax information-sharing rule for crypto-assets soon. Under DAC8, which will take effect in 2026, crypto-asset service providers must report transaction details to tax authorities in EU countries. DAC8 will require tax reporting for some crypto-asset categories like non-fungible tokens.
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