CRYPTOCURRENCY TAX REPORTING ACKNOWLEDGMENT

Date: [DATE]

Document Number: [TAX-ACK-XXXX]

PARTIES

SERVICE PROVIDER:
- Legal Name: [PROVIDER NAME] (the "Provider")
- Address: [ADDRESS]
- Type of Service: ☐ Exchange ☐ Custodian ☐ Broker ☐ Other: [SPECIFY]

USER/CLIENT:
- Legal Name: [USER NAME] (the "User")
- Address: [ADDRESS]
- Tax Identification Number: [SSN/EIN - Last 4 digits: XXXX]
- Account Number: [ACCOUNT NUMBER]

PURPOSE

This Cryptocurrency Tax Reporting Acknowledgment (the "Acknowledgment") is provided to inform User of tax reporting obligations and requirements related to cryptocurrency and digital asset transactions, and to obtain User's acknowledgment of these obligations.

SECTION 1: IRS CLASSIFICATION OF CRYPTOCURRENCY

1.1 Property Classification

☐ I understand that the Internal Revenue Service (IRS) treats cryptocurrency and digital assets as property for federal tax purposes (IRS Notice 2014-21).

☐ I understand this means that general tax principles applicable to property transactions apply to cryptocurrency transactions.

1.2 Taxable Events

☐ I understand that the following are generally taxable events:

1.3 Non-Taxable Events

☐ I understand that the following are generally NOT taxable events:

• Purchasing cryptocurrency with fiat currency (establishes cost basis)
• Transferring cryptocurrency between personal wallets
• Gifting cryptocurrency (gift tax rules may apply to donor)
• Inheriting cryptocurrency (step-up in basis may apply)

SECTION 2: TAX REPORTING REQUIREMENTS

2.1 User Reporting Obligations

☐ I understand that I am required to report all taxable cryptocurrency transactions on my federal income tax return, regardless of whether I receive a Form 1099 or other tax document.

☐ I understand that I must answer the digital asset question on Form 1040: "At any time during [YEAR], did you receive, sell, exchange, or otherwise dispose of any digital asset?"

☐ I understand that I must report:
- Capital gains and losses on Schedule D and Form 8949
- Ordinary income from cryptocurrency on Schedule 1 or Schedule C
- Foreign account holdings if applicable (FBAR, Form 8938)

2.2 Record Keeping

☐ I understand that I am responsible for maintaining records of all cryptocurrency transactions, including:

• Date of acquisition
• Date of sale or disposition
• Cost basis (purchase price plus fees)
• Fair market value at time of acquisition
• Sale price or fair market value at disposition
• Transaction fees
• Purpose of transaction
• Wallet addresses involved
• Exchange or platform used

☐ I understand that I should retain these records for at least [7] years.

2.3 Cost Basis Methods

☐ I understand that I may use the following IRS-accepted cost basis methods:

☐ I understand that I should consult a tax professional to determine the most appropriate method for my situation.

SECTION 3: BROKER REPORTING REQUIREMENTS

3.1 New Reporting Rules (Effective 2025-2026)

☐ I understand that under the Infrastructure Investment and Jobs Act of 2021, cryptocurrency brokers are required to report customer transactions to the IRS.

☐ I understand that beginning with the 2025 tax year (reported in 2026), Provider may be required to issue Form 1099-DA (Digital Assets) reporting:
- Gross proceeds from sales
- Cost basis (phased in for 2026)
- Gain or loss
- Whether gain/loss is long-term or short-term

3.2 Information Provider May Report

☐ I understand that Provider may report the following information to the IRS:

3.3 Cost Basis Limitations

☐ I understand that Provider may not have complete cost basis information if:
- I transferred cryptocurrency from another exchange or wallet
- I acquired cryptocurrency before using Provider's services
- Transaction history is incomplete

☐ I understand that if Provider does not have cost basis information, I am still responsible for determining and reporting my correct cost basis.

3.4 Information Discrepancies

☐ I understand that the information reported by Provider may not match my records due to:
- Transfers in/out without cost basis
- Different cost basis accounting methods
- Data limitations
- Timing differences

☐ I understand that I am responsible for ensuring accurate reporting regardless of what Provider reports.

SECTION 4: STATE TAX OBLIGATIONS

4.1 State Income Tax

☐ I understand that in addition to federal taxes, I may owe state income tax on cryptocurrency transactions in my state of residence.

☐ I understand that state tax treatment may differ from federal treatment.

4.2 State Reporting

☐ I understand that some states require separate reporting of cryptocurrency transactions.

☐ I understand that Provider may provide information to state tax authorities as required by law.

SECTION 5: INTERNATIONAL CONSIDERATIONS

5.1 FBAR Requirements

☐ I understand that if I hold cryptocurrency on foreign exchanges or in foreign accounts exceeding $10,000 at any time during the year, I may be required to file a Report of Foreign Bank and Financial Accounts (FBAR) - FinCEN Form 114.

5.2 FATCA Requirements

☐ I understand that if I hold specified foreign financial assets exceeding applicable thresholds, I may be required to report them on Form 8938.

5.3 Foreign Tax Credits

☐ I understand that if I pay foreign taxes on cryptocurrency gains, I may be eligible for a foreign tax credit.

SECTION 6: SPECIAL SITUATIONS

6.1 Airdrops and Hard Forks

☐ I understand that receiving cryptocurrency from an airdrop or hard fork is a taxable event when I have "dominion and control" over the assets (can transfer, sell, or exchange them).

☐ I understand that the fair market value at the time of receipt is treated as ordinary income.

6.2 Staking Rewards

☐ I understand that staking rewards are generally taxable as ordinary income when received, based on the fair market value at the time of receipt.

☐ I understand the IRS issued guidance (Revenue Ruling 2023-14) and a safe harbor (November 2025) regarding staking rewards.

6.3 Mining Income

☐ I understand that cryptocurrency received from mining is taxable as ordinary income based on fair market value when received.

☐ I understand that if mining constitutes a trade or business, self-employment tax may apply.

6.4 NFT Transactions

☐ I understand that buying, selling, and trading NFTs may have tax consequences similar to other digital assets.

☐ I understand that NFTs may be classified as collectibles, potentially subject to higher long-term capital gains rates (up to 28%).

6.5 DeFi Transactions

☐ I understand that DeFi transactions (swaps, liquidity provision, lending, etc.) may have complex tax implications.

☐ I understand that I should consult a tax professional familiar with DeFi taxation.

SECTION 7: PENALTIES FOR NON-COMPLIANCE

7.1 Civil Penalties

☐ I understand that failure to properly report cryptocurrency transactions may result in:

7.2 Criminal Penalties

☐ I understand that willful tax evasion, including failure to report cryptocurrency transactions, may result in criminal prosecution with penalties including fines and imprisonment.

7.3 IRS Enforcement

☐ I understand that the IRS has made cryptocurrency tax enforcement a priority and uses blockchain analytics to identify unreported transactions.

SECTION 8: DISCLAIMERS

8.1 Not Tax Advice

☐ I understand that Provider is not providing tax, legal, or accounting advice.

☐ I understand that this Acknowledgment is for informational purposes only.

☐ I understand that I should consult with a qualified tax professional for advice specific to my situation.

8.2 No Guarantee of Accuracy

☐ I understand that Provider does not guarantee the accuracy or completeness of any tax documents or reports.

☐ I understand that I am solely responsible for the accuracy of my tax filings.

8.3 Changing Laws

☐ I understand that cryptocurrency tax laws and regulations are evolving and may change.

☐ I understand that I am responsible for staying informed about current tax requirements.

SECTION 9: USER CERTIFICATIONS

9.1 Tax Identification

☐ I certify that the tax identification number I have provided to Provider is correct.

☐ I certify that I am not subject to backup withholding (unless otherwise indicated).

☐ I certify that I am a U.S. person (or will provide appropriate documentation if not).

9.2 Reporting Acknowledgment

☐ I acknowledge that I am solely responsible for determining and reporting all taxable cryptocurrency transactions.

☐ I acknowledge that Provider's reports may not include all information necessary for my tax filings.

☐ I acknowledge that I will maintain my own records of all cryptocurrency transactions.

9.3 Professional Advice

☐ I acknowledge that Provider has recommended I consult with a qualified tax professional.

☐ I acknowledge that any tax-related decisions are my responsibility.

SECTION 10: CONSENT TO REPORTING

10.1 Consent

☐ I consent to Provider reporting information about my cryptocurrency transactions to the IRS and state tax authorities as required by law.

☐ I consent to Provider providing me with tax documents (Form 1099-DA or equivalent) electronically.

10.2 Electronic Delivery

☐ I consent to receive tax documents electronically through:
- Provider's platform/dashboard
- Email notification with secure link
- Other electronic method designated by Provider

☐ I understand I may request paper copies by contacting [CONTACT INFORMATION].

SIGNATURE

By signing below, I acknowledge that I have read, understand, and agree to the statements in this Cryptocurrency Tax Reporting Acknowledgment.

User Signature: _________________________________

Printed Name: [NAME]

Date: [DATE]

Email: [EMAIL]

APPENDIX A: TAX DOCUMENT TIMELINE

APPENDIX B: TAX RESOURCES

IRS Resources:
- IRS Notice 2014-21 (Virtual Currency Guidance)
- IRS FAQ on Virtual Currency Transactions
- Form 8949 Instructions
- Schedule D Instructions

Tax Forms:
- Form 8949: Sales and Other Dispositions of Capital Assets
- Schedule D: Capital Gains and Losses
- Schedule 1: Additional Income
- Schedule C: Business Income (if applicable)
- Form 8938: Statement of Specified Foreign Financial Assets
- FinCEN Form 114: FBAR

Professional Resources:
- Certified Public Accountant (CPA) with cryptocurrency experience
- Enrolled Agent (EA) with cryptocurrency experience
- Tax attorney specializing in cryptocurrency

REGULATORY NOTICES

IRS NOTICE: The IRS treats virtual currency as property for federal tax purposes. General tax principles applicable to property transactions apply to transactions using virtual currency.

INFRASTRUCTURE ACT: The Infrastructure Investment and Jobs Act of 2021 expanded broker reporting requirements for digital assets, effective for transactions beginning in 2025.

STATE TAXES: State tax treatment of cryptocurrency may vary. Users should consult state tax authorities or a tax professional for state-specific guidance.

EVOLVING GUIDANCE: Cryptocurrency tax guidance is evolving. Users should monitor IRS announcements and consult tax professionals for current requirements.

This acknowledgment is provided for informational purposes only and does not constitute tax, legal, or accounting advice. Users should consult qualified professionals for advice specific to their situations.