# Bitcoin payments can trigger tax reporting obligations as broker records leave gaps

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/41402
Published: 2026-10-26T22:40:36.000Z
Updated: 2026-10-26T22:40:36.000Z
Section: Regulation

> Bitcoin payments can generate taxable gains or losses, Deloitte's Rob Massey said. Broker reports may leave gaps, making complete transaction histories and cost-basis records essential.

Using Bitcoin to pay for goods and services can generate taxable gains or losses in the United States, leaving individuals and businesses responsible for tracking transactions beyond those covered by broker reports.

In an October 26 interview with Bitcoin Magazine, Rob Massey, Deloitte's Global Tax Leader for Blockchain and Digital Assets, said the US self-assessment system requires taxpayers to report their gains and losses whether or not a broker reports them on a 1099.

Massey said exchanging Bitcoin for another asset, spending it on goods or services, and buying or selling it are generally events that realize gains or losses for tax purposes. Using Bitcoin in place of fiat currency constitutes a barter transaction, bringing tax reporting into everyday payments.

A payment to a plumber illustrates the distinction, he said: if the Bitcoin's value when spent differs from its acquisition cost, the payment can realize a gain. Moving Bitcoin between a person's own wallets because of security concerns, by contrast, would probably not constitute a realization event.

Broker reporting covers only part of that activity. Massey said taxpayers were beginning to receive 1099-DA forms showing proceeds, with cost-basis information to follow, but those reports would still be incomplete. Transactions involving Bitcoin held outside broker custody may generate no 1099, requiring holders to account for them separately.

Proposed exemptions for small transactions had not removed that reporting burden, Massey said. Recent proposals applied only to network transaction fees and had not become law. He said transactions of any size still needed to be reported, supported by books and records sufficient to substantiate gains and losses.

Corporate questions increasingly concern financial products and lending, according to Massey. He cited interest in Bitcoin ETPs as investments or a source of leverage, alongside questions about handling their reports. Existing securities-lending tax provisions have no equivalent for crypto lending, he said, leaving advisers to apply general tax principles and analogies.

Massey identified lending, the classification of income and cost-basis tracking as areas needing further guidance. He welcomed the IRS and Treasury's recognition of differences between self-custody and broker custody in basis-tracking rules, describing that work as a foundation for further clarification.

Cross-border transactions introduce additional uncertainty. Massey said no tax treaties directly addressed crypto at the time of the interview, raising questions about the nature of Bitcoin-related returns, withholding treatment and the acquisition cost of Bitcoin used in a payment. Whether income from overseas business activity is ordinary income or capital gain can also affect its tax treatment.

Multinational treasury teams are evaluating both Bitcoin and stablecoins, he said. Their considerations include payment corridors, counterparties' preferences, liquidity at each end, treatment in the recipient jurisdiction, transferability and internal controls. The assessment extends beyond tax to the efficiency of moving funds and managing risk.

For suspected past reporting omissions, Massey described working with an attorney and a certified public accountant to assess transaction history and possible remedies, including amended returns or voluntary disclosure. He emphasized addressing gaps before receiving an IRS notice, while noting that the agency's transaction-tracking tools were becoming more sophisticated.

That process depends on assembling a complete transaction history across self-custody wallets and broker accounts, Massey said. Records need to explain what each movement represented and substantiate the original acquisition cost through subsequent transfers. Without support for that cost basis, a holder may be unable to use it when calculating a later gain or loss.