Bulletin No. 2024–29

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2024–29

July 15, 2024

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE

Notice 2024-56, page 64.

This notice provides transitional relief from penalties for any

broker who fails to timely and correctly file and furnish information returns and payee statements under section 6045

for sales of digital assets effected in calendar year 2025, if

that broker makes a good faith effort to so file and furnish

the information returns and payee statements accurately.

This notice also provides transitional relief from backup

withholding tax liability and associated penalties for any

broker that fails to withhold and pay the backup withholding

tax for certain sales effected in 2025 and 2026. This notice

also provides transitional relief from penalties for brokers

who fail to backup withhold and pay the full backup withholding tax due, if such failure is due to a decrease in the value

of withheld digital assets in a sale of digital assets in return

for different digital assets effected on or before December

31, 2026, and the broker immediately liquidates the withheld digital assets for cash. Finally, this notice sets forth

when a broker may treat a customer as a U.S. digital asset

broker, the sales effected for whom are exempt from information reporting from information, prior to the publication

of a revised Form W-9, Request for Taxpayer Identification

Number and Certification, providing for the certification of

U.S. digital asset broker status.

Notice 2024-57, page 67.

This notice provides that brokers are not required under

section 6045 to file information returns and furnish payee

statements with respect to certain identified transactions

and that the IRS will not impose penalties for failure to

file correct information returns or failure to furnish correct

payee statements with respect to these identified transactions. The identified transactions are described in the

notice as: (1) Wrapping and unwrapping transactions; (2)

Liquidity provider transactions; (3) Staking transactions;

Finding Lists begin on page ii.

(4) transactions described by DA market participants as

lending of DAs; (5) transactions described by DA market

participants as short sales of DAs ; and (6) Notional principal contracts. The notice states that the inclusion of the

described transactions in the notice does not constitute

or reflect a substantive analysis for Federal income tax

purposes of any of the identified transactions or their component steps, and no inference is intended as to how an

identified transaction, or its component steps, is treated

for substantive Federal income tax purposes. Additionally,

the inclusion of the described transactions in the notice

is not intended to create an inference that the identified

transaction is or is not a sale of a digital asset or that it

would be required to be reported under section 6045 but

for this notice.

EXCISE TAX

T.D. 10002, page 56.

Section 10201 of Public Law 117-169, 136 Stat. 1818

(August 16, 2022), commonly referred to as the Inflation

Reduction Act of 2022, enacted section 4501 of the Internal Revenue Code. Section 4501 imposes a one percent

excise tax on repurchases of stock of a publicly traded corporation. These final regulations under subpart B of part 58

contain procedural rules that provide further clarity regarding the reporting, payment, and other procedural obligations of corporations subject to section 4501.

EXEMPT ORGANIZATIONS

Announcement 2024-29, page 71.

Revocation of IRC 501(c)(3) Organizations for failure to

meet the code section requirements. Contributions made to

the organizations by individual donors are no longer deductible under IRC 170(b)(1)(A).

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and

enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

July 15, 2024 

Bulletin No. 2024–29

Part I

TD 10002

Excise Tax on Repurchase

of Corporate Stock

– Procedure and

Administration

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains

final regulations that provide guidance

regarding the reporting and payment of

the excise tax on repurchases of corporate

stock made after December 31, 2022. The

regulations affect certain publicly traded

corporations that repurchase their stock or

whose stock is acquired by certain specified affiliates.

DATES: Effective date: These final regulations are effective on June 28, 2024.

Applicability dates: For dates of applicability, see §§58.6001-(d), 58.6011-1(d),

58.6060-1(b), 58.6061-1(b), 58.60651(b),

58.6071-1(e),

58.6091-1(d),

58.6107-1(b), 58.6109-1(b), 58.61511(b), 58.6694-1(e), 58.6695-1(b), and

58.6696-1(b).

SUPPLEMENTARY INFORMATION:

Background

I. The Proposed Regulations

On April 12, 2024, the Department of

the Treasury (Treasury Department) and

the IRS published proposed regulations

(REG-118499-23) in the Federal Register

(89 FR 25829) that would provide rules on

procedure and administration applicable

to the reporting and payment of the excise

tax on repurchases of corporate stock

(stock repurchase excise tax) imposed

by section 4501 of the Internal Revenue

Code (Code) for repurchases made after

December 31, 2022 (proposed procedural

regulations). This Treasury decision finalizes the proposed procedural regulations

July 15, 2024

(other than proposed §58.6011-1(c)) after

taking into account comments received, as

described in the Summary of Comments

and Explanation of Revisions section of

this preamble. The final regulations are

added as subpart B of new 26 CFR part

58 (Stock Repurchase Excise Tax Regulations), which is added to subchapter D of

26 CFR chapter I (Miscellaneous Excise

Taxes).

On April 12, 2024, the Treasury

Department and the IRS also published

a separate notice of proposed rulemaking

(REG-115710-22) in the same issue of

the Federal Register (89 FR 25980) that

would provide operating rules in proposed

subpart A of part 58 relating to the computation of the stock repurchase excise

tax (proposed computational regulations).

This Treasury decision does not finalize

the proposed computational regulations.

The Treasury Department and the IRS

intend to finalize the proposed computational regulations in a separate Treasury

decision after considering comments

received with respect to those proposed

regulations.

II. Section 4501; Notice 2023-2

Section 4501 was added to a new chapter 37 of the Code by the enactment of

section 10201 of Public Law 117-169, 136

Stat. 1818 (August 16, 2022), commonly

referred to as the Inflation Reduction Act

of 2022 (IRA). In general, section 4501

imposes the stock repurchase excise tax

on each covered corporation (as defined

in section 4501(b)) for repurchases made

after December 31, 2022. See section

10201(d) of the IRA. The stock repurchase excise tax is equal to 1 percent of

the fair market value of any stock of the

covered corporation that is repurchased

(as defined in section 4501(c)(1)) by the

covered corporation, or treated as repurchased by the covered corporation, during

the taxable year. Section 4501(a). The

term “covered corporation” includes an

entity treated as a covered corporation

under section 4501(d)(1)(A) or (d)(2)(A).

Section 4501(f) authorizes the Secretary of the Treasury or her delegate (Secretary) to prescribe regulations and other

guidance as are necessary or appropriate

56

to carry out, and to prevent the avoidance

of, the purposes of section 4501.

On January 17, 2023, the Treasury

Department and the IRS published Notice

2023-2, 2023-3 I.R.B. 374, to provide

initial guidance on the application of the

stock repurchase excise tax. The notice

described certain operating rules for purposes of the stock repurchase excise tax

that the Treasury Department and the

IRS intended to include in proposed regulations. In addition, section 4 of Notice

2023-2 described the anticipated rules for

reporting and paying any liability for the

stock repurchase excise tax. As described

in Notice 2023-2, those anticipated rules

would provide that (i) the stock repurchase excise tax must be reported on IRS

Form 720, Quarterly Federal Excise Tax

Return, (ii) taxpayers must attach an additional form to the Form 720 reflecting

the computation of the stock repurchase

excise tax, (iii) the stock repurchase excise

tax must be reported once per taxable year

on the Form 720 that is due for the first

full quarter after the close of the taxpayer’s taxable year, (iv) the deadline for payment of the stock repurchase excise tax is

the same as the filing deadline, and (v) no

extensions are permitted for reporting or

paying the stock repurchase excise tax.

Consistent with Notice 2023-2, on

April 12, 2024, the Treasury Department

and the IRS published the proposed procedural regulations prescribing the manner

and method of reporting and paying the

stock repurchase excise tax in proposed

subpart B of the proposed Stock Repurchase Excise Tax Regulations (26 CFR

part 58) under sections 6001, 6011, 6060,

6061, 6065, 6071, 6091, 6107, 6109,

6151, 6694, 6695, and 6696 of the Code.

As noted in the preamble to the proposed

procedural regulations, to assist in the

identification of transactions subject to the

stock repurchase excise tax, the Treasury

Department and the IRS have added items

relevant to the stock repurchase excise

tax to tax return forms other than Form

720. See Form 1120, U.S. Corporation

Income Tax Return and Form 1065, U.S.

Return of Partnership Income. The Treasury Department and the IRS continue to

evaluate amending or developing other

forms, including for information reporting

Bulletin No. 2024–29

with respect to foreign owners of domestic business entities and domestic owners

of foreign business entities, to assist in the

identification of transactions subject to the

stock repurchase excise tax.

Summary of Comments and

Explanation of Revisions

After consideration of the comments

received in response to the proposed procedural regulations, this Treasury decision

adopts those regulations (other than proposed §58.6011-1(c)) with the revisions

described in this Summary of Comments

and Explanation of Revisions.

I. Combination of Proposed Procedural

Regulations and Proposed Computational

Regulations

One commenter suggested that the proposed computational regulations and the

proposed procedural regulations should

be combined into one proposal because

they stem from the same piece of legislation, have the same goal, and employ

the same methodology of achieving that

goal. These final regulations do not adopt

the commenter’s suggestion. Although the

proposed computational regulations and

the proposed procedural regulations stem

from, and facilitate the implementation

of, the same piece of legislation, the Treasury Department and the IRS proposed

these regulations in two separate notices

of proposed rulemaking to facilitate the

prompt finalization of the proposed procedural regulations, and to thereby provide

taxpayers with certainty regarding the

manner of reporting and paying the stock

repurchase excise tax. Moreover, it is not

uncommon for the Treasury Department

and the IRS to issue separate tranches of

regulatory guidance with respect to a single statutory provision.

II. Recordkeeping Requirement

Under proposed §58.6001-1(a), any

covered corporation, or any person treated

as a covered corporation, that makes a

repurchase or that is treated as making a

repurchase is required to keep complete

and detailed records sufficient to establish accurately the amount of repurchases,

adjustments, or exceptions required to be

Bulletin No. 2024–29

shown on its stock repurchase excise tax

return. Proposed §58.6001-1(b) provides

that the IRS may require any covered corporation or person treated as a covered

corporation to make such returns, render

such statements, or keep such specific

records as to enable the IRS to determine

whether the covered corporation or person

treated as a covered corporation is liable

for the stock repurchase excise tax. Proposed §58.6001-1(c) provides that the

records required to be maintained must

be available for inspection by the IRS and

retained for so long as their contents may

become material.

One commenter suggested that a covered corporation should be required to

keep only complete and detailed records

sufficient to establish the amount of tax

shown on its stock repurchase excise tax

return, which is defined under proposed

§58.6011-1(b). For example, according

to the commenter, if the covered corporation chooses one method for valuing the

amount of the corporation’s repurchases

and issuances, and the IRS asserts that the

covered corporation should have used a

different method for valuing the amount

of the corporation’s repurchases and issuances, the covered corporation should not

be required to maintain records sufficient

to establish the amount of the corporation’s repurchases and issuances under the

IRS’s preferred method of valuation.

The Treasury Department and the

IRS disagree with the commenter. The

recordkeeping requirements in proposed

§58.6001-1(a) are similar to the recordkeeping requirements under section 6001

for other excise taxes in subchapter D of

26 CFR chapter I (Miscellaneous Excise

Taxes). See, for example, §§53.6001-1(a)

(“Any person subject to tax under chapter

42 . . . shall keep records as are sufficient

to enable the district director to determine accurately the amount of liability”);

55.6001-1(a) (similar with respect to tax

under chapter 44); 56.6001-1(a) (similar with respect to tax under chapter 41);

156.6001-1(a) (similar with respect to

tax under chapter 54); and 157.6001-1(a)

(similar with respect to tax under chapter

55). Moreover, the valuation requirements

in the proposed computational regulations would allow covered corporations

to choose from one of four acceptable

methods in determining the market price

57

of publicly traded stock so long as the

covered corporation consistently applies

such method throughout the covered

corporation’s taxable year. See proposed

§§58.4501-2(h) and -4(e). This recordkeeping requirement appropriately balances the need for covered corporations

to keep records with the IRS’s need to be

able to establish accurately the amount of

repurchases, adjustments, or exceptions

required to be shown on a covered corporation’s stock repurchase excise tax return.

Accordingly, these final regulations do not

adopt this comment.

III. Return Requirement

A. Overview

Proposed §58.6011-1(a) would require

a stock repurchase excise tax return to

be filed by any covered corporation, or

any person treated as a covered corporation, that makes a repurchase (as defined

in section 4501(c)(1)), or that is treated

as making a repurchase under section

4501(c)(2)(A), (d)(1)(B), or (d)(2)(B),

after December 31, 2022. Under the proposed procedural regulations, any covered

corporation, or any person treated as a

covered corporation, that makes a repurchase, or that is treated as making a repurchase, is required to comply with these

requirements, even if every repurchase

is eligible for a statutory exception under

section 4501(e) (for example, in the case

of repurchases by a regulated investment

company (RIC), as defined in section 851

of the Code, or a real estate investment

trust (REIT), as defined in section 856(a)

of the Code) or is offset by issuances or

provisions of the covered corporation’s

stock under section 4501(c)(3).

B. Filing obligations of regulated

investment companies and real estate

investment trusts

One commenter recommended that

RICs and REITs should be exempt from

filing the Form 7208, Excise Tax on

Repurchase of Corporate Stock, provided

all repurchases during the relevant reporting period are made by the RIC or the

REIT and thereby qualify for the statutory

exception under section 4501(e)(5). Alternatively, the commenter recommended

July 15, 2024

that, in lieu of requiring RICs and REITs

to file Form 7208 with respect to their

repurchases, the IRS could add a “checkbox” to Form 1120-RIC, U.S. Income Tax

Return for Regulated Investment Companies, and Form 1120-REIT, U.S. Income

Tax Return for Real Estate Investment

Trusts, pursuant to which RICs and REITs

could certify that all stock repurchases

made during the taxable year qualified

for the statutory exception under section

4501(e)(5). According to the commenter,

requiring RICs and REITs to file a Form

7208 in situations in which all their repurchases qualify for the statutory exception

under section 4501(e)(5) would be unnecessary, burdensome, and duplicative of

filings already required by the Securities

and Exchange Commission (SEC), with

no apparent benefit for tax compliance.

The Treasury Department and the IRS

agree that, so long as a covered corporation qualifies as a RIC or a REIT for a

taxable year, then all of such corporation’s

repurchases of its stock during that year

would qualify for the statutory exception

under section 4501(e)(5). Accordingly,

the final regulations adopt the commenter’s primary recommendation and exempt

RICs and REITs from the obligation to file

a stock repurchase excise tax return. See

§58.6011-1(a).

However, RICs and REITs would continue to be subject to the recordkeeping

requirement in §58.6001-1 under the final

regulations. Records establishing a RIC’s

or a REIT’s repurchases, adjustments, and

exceptions under the stock repurchase

excise tax could become relevant in the

event a covered corporation ceases to

qualify as a RIC or a REIT for the taxable

year, or if the corporation revokes its election to be a REIT for the taxable year. In

such cases, the corporation’s repurchases

would not qualify for the exception under

section 4501(e)(5), and the information

required to be retained under §58.6001-1

would be required to compute the corporation’s stock repurchase excise tax liability.

C. Filing obligation only for taxable

years in which a repurchase is made

Commenters have asked whether proposed §58.6011-1(a) could be construed

as mandating a continuing annual filing

July 15, 2024

requirement for any covered corporation

or any person treated as a covered corporation that has made a repurchase, or that

is treated as having made a repurchase,

in a previous taxable year. For example,

commenters have suggested that the language of proposed §58.6011-1(a) could

be read as requiring a covered corporation to file a stock repurchase excise tax

return even with respect to taxable years

in which the covered corporation has not

made a repurchase, because proposed

§58.6011-1(a) requires any covered corporation that makes a repurchase after

December 31, 2022, to file a stock repurchase excise tax return, without specifying

that a repurchase must occur within the

period for which such return is filed.

The Treasury Department and the

IRS intended a stock repurchase excise

tax return to be filed only with respect to

a taxable year in which a repurchase, or

a transaction treated as a repurchase, is

made. Accordingly, these final regulations

revise §58.6011‑1(a) to clarify that a stock

repurchase excise tax return must be filed

with respect to any taxable year in which

the covered corporation or person treated

as a covered corporation makes a repurchase or is treated as making a repurchase.

D. Special rules for multiple section

4501(d) covered corporations with

respect to a covered surrogate foreign

corporation

Proposed §58.6011-1(c) cross-references proposed §58.4501‑7(d)(2) for

special rules applicable to persons treated

as a covered corporation (as described in

section 4501(d)(2)(A)) with respect to a

covered surrogate foreign corporation (as

defined in section 4501(d)(3)(B)). These

final regulations reserve §58.6011-1(c).

The Treasury Department and the IRS

intend to finalize proposed §58.6011-1(c)

when proposed §58.4501-7(d)(2) is finalized.

IV. Signing of Stock Repurchase Excise

Tax Return

Under proposed §58.6061-1(a), any

stock repurchase excise tax return, statement, or other document required to be

made with respect to the stock repurchase

excise tax would be required to be signed

58

by the person required to file the return,

statement, or other document, or by the

persons required or duly authorized to sign

in accordance with the regulations, forms,

or instructions prescribed with respect to

such return, statement, or document.

One commenter suggested that the

signing requirement under proposed

§58.6061-1(a) should be coordinated with

the signing requirement under section

6062 of the Code. Section 6062 provides

that “[t]he return of a corporation with

respect to income shall be signed by the

president, vice-president, treasurer, assistant treasurer, chief accounting officer or

any other officer duly authorized so to act”

(emphasis added).

These final regulations do not adopt

this comment. By its terms, section 6062

addresses corporate income tax returns

and does not apply to excise tax returns,

including the stock repurchase excise

tax return. Accordingly, the appropriate

party to sign the stock repurchase excise

return must be designated under section

6061, rather than section 6062. Moreover, proposed §58.6011-1(b) would provide that the stock repurchase excise tax

return is the Form 720 with an attached

Form 7208. The Form 7208 does not

have a signature line, and the instructions

to the Form 7208 require the form to be

attached to a Form 720, which must be

signed under penalties of perjury. See

Instructions to Form 7208. As such, the

appropriate party to sign the stock repurchase excise tax return is the party who

signs the Form 720.

V. Example in Proposed §58.6071‑1(d)

The Treasury Department and the IRS

have made non-substantive revisions to

the Example in proposed §58.6071‑1(d)

to align it with the effective date of these

final regulations.

VI. Modification of Applicability Date

The rules described in the proposed

procedural regulations generally were

proposed to have applied to stock repurchase excise tax returns (and to the extent

relevant, claims for refund) required to be

filed after the date final regulations were

published in the Federal Register, and

during taxable years ending after the date

Bulletin No. 2024–29

final regulations were published in the

Federal Register. These final regulations

will apply to stock repurchase excise tax

returns (and to the extent relevant, claims

for refund) required to be filed after the

date these final regulations are filed with

the Federal Register, and during taxable

years ending after the date these final regulations are filed in the Federal Register.

The Treasury Department and the IRS

have made this slight adjustment to the

applicability dates to facilitate the IRS’s

administration and enforcement of the

stock repurchase excise tax and provide

guidance to taxpayers as quickly as possible.

Statement of Availability for IRS

Documents

Any IRS Revenue Procedure, Revenue Ruling, Notice, or other guidance

cited in this preamble is published in the

Internal Revenue Bulletin (or Cumulative

Bulletin) and is available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC

20402, or by visiting the IRS website at

https://www.irs.gov.

Special Analyses

I. Regulatory Planning and Review—

Economic Analysis

Pursuant to the Memorandum of

Agreement, Review of Treasury Regulations under Executive Order 12866 (June

9, 2023), tax regulatory actions issued by

the IRS are not subject to the requirements

of section 6 of Executive Order 12866, as

amended. Therefore, a regulatory impact

assessment is not required.

II. Paperwork Reduction Act

The Paperwork Reduction Act of 1995

(44 U.S.C. 3501-3520) (PRA) requires

that a Federal agency obtain the approval

of Office of Management and Budget

(OMB) before collecting information

from the public, whether such collection

of information is mandatory, voluntary,

or required to obtain or retain a benefit. A

Federal agency may not conduct or sponsor, and a person is not required to respond

to, a collection of information unless the

Bulletin No. 2024–29

collection of information displays a valid

control number.

The collections of information in

these final regulations contain reporting and recordkeeping requirements in

§§58.6001-1 and 58.6011-1 necessary for

the IRS to accurately determine the stock

repurchase excise tax due. The collection

of information is required by law to comply with the provisions of section 4501 of

the Code as enacted by section 10201 of

the IRA.

The recordkeeping requirements mentioned within these final regulations are

considered general tax records under section 6001. These records are required for

the IRS to validate that taxpayers have met

the regulatory requirements. The reporting requirements, including the written

penalty of perjury statement, are covered

within Form 7208 and its instructions. The

IRS obtained OMB approval for Form

7208 and the associated collections under

1545-2323 in accordance with the procedures outlined in 5 CFR 1320.10.

These final regulations mention reporting and recordkeeping requirements for

tax preparers. These final regulations are

not changing the requirements contained

within §1.6107-1, which is included in

1545-1231.

III. Regulatory Flexibility Act

Pursuant to the Regulatory Flexibility

Act (5 U.S.C. chapter 6), it is hereby certified that these final regulations will not

have a significant economic impact on a

substantial number of small entities. This

certification is based on the fact that these

final regulations provide specific administrative, procedural, and recordkeeping rules

that apply only to certain tax return preparers and to publicly traded corporations,

which tend to consist of larger businesses.

Specifically, based on data available to the

IRS, for tax year 2021, 4,366 corporations

reported publicly traded common stock. Of

those corporations, 2,407 (over 55 percent)

reported gross receipts over $100 million,

and 3,272 (approximately 75 percent)

reported gross receipts over $10 million.

Meanwhile, for tax year 2021, the IRS

received 7,464,790 Corporation Income

Tax Returns and 4,710,457 U.S. Returns of

Partnership Income. IRS Publication 6292,

Fiscal Year Projections for the United

59

States: 2022-2029, Fall 2022, Table 2. Of

these corporation and partnership returns

for tax year 2021, 11,685,207 reported total

assets below $10 million. Thus, the number

of corporations affected by these final regulations that reported total assets below $10

million is less than one hundredth of one

percent of the total number of businesses

that reported total assets below $10 million

for tax year 2021. Therefore, these final

regulations will not create additional obligations for, or impose an economic impact

on, a substantial number of small entities.

Accordingly, the Secretary certifies that the

final regulations will not have a significant

economic impact on a substantial number

of small entities and a regulatory flexibility

analysis under the Regulatory Flexibility

Act is not required.

IV. Section 7805(f)

Pursuant to section 7805(f) of the

Internal Revenue Code, the proposed

procedural regulations (REG-118499-23)

preceding these final regulations were

submitted to the Chief Counsel for Advocacy of the Small Business Administration

for comment on the impact on small business, and no comments were received.

V. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates

Reform Act of 1995 requires that agencies

assess anticipated costs and benefits and

take certain other actions before issuing a

final rule that includes any Federal mandate

that may result in expenditures in any one

year by a State, local, or Tribal government,

in the aggregate, or by the private sector,

of $100 million in 1995 dollars, updated

annually for inflation. These final regulations do not include any Federal mandate

that may result in expenditures by State,

local, or Tribal governments, or by the private sector in excess of that threshold.

VI. Executive Order 13132: Federalism

Executive Order 13132 (Federalism)

prohibits an agency (to the extent practicable and permitted by law) from promulgating any regulation that has federalism

implications, unless the agency meets the

consultation and funding requirements

of section 6 of the Executive order, if

July 15, 2024

the rule either imposes substantial, direct

compliance costs on State and local governments, and is not required by statute,

or preempts State law. This final rule does

not have federalism implications and does

not impose substantial direct compliance

costs on State and local governments or

preempt State law within the meaning of

the Executive order.

VI. Congressional Review Act

Pursuant to the Congressional Review

Act (5 U.S.C. 801 et seq.), the Office of

Information and Regulatory Affairs designated this rule as not a “major rule,” as

defined by 5 U.S.C. 804(2).

Drafting Information

The principal authors of these regulations are Kailee H. Farrell and Samuel G.

Trammell of the Office of Associate Chief

Counsel (Corporate). However, other personnel from the Treasury Department and

the IRS participated in their development.

List of Subjects in 26 CFR Part 58

Excise taxes, Stock repurchase excise

tax, Reporting and recordkeeping requirements.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 58 is added

to read as follows:

PART 58—STOCK REPURCHASE

EXCISE TAX

Subpart A—[Reserved]

Subpart B—Procedure and

Administration

Sec.

58.6001-1 Notice or regulations requiring

records, statements, and special returns.

58.6011-1 General requirement of return,

statement, or list.

58.6060-1 Reporting requirements for tax

return preparers.

58.6061-1 Signing of returns and other

documents.

July 15, 2024

58.6065-1 Verification of returns.

58.6071-1 Time for filing returns.

58.6091-1 Place for filing tax returns under

chapter 37 of the Internal Revenue Code.

58.6107-1 Tax return preparer must furnish copy of return or claim for refund to

taxpayer and must retain a copy or record.

58.6109-1 Tax return preparers furnishing

identifying numbers for returns or claims

for refund.

58.6151-1 Time and place for paying of

tax shown on returns.

58.6694-1 Section 6694 penalties.

58.6695-1 Other assessable penalties with

respect to the preparation of tax returns or

claims for refund for other persons.

58.6696-1 Claims for credit or refund by

tax return preparers.

Authority: 26 U.S.C. 4501(f) and 7805.

Section 58.6001-1 also issued under 26

U.S.C. 6001;

Section 58.6011-1 also issued under 26

U.S.C. 6011(a);

Section 58.6060-1 also issued under 26

U.S.C. 6060(a);

Section 58.6061-1 also issued under 26

U.S.C. 6061(a);

Section 58.6065-1 also issued under 26

U.S.C. 6065;

Section 58.6071-1 also issued under 26

U.S.C. 6071(a);

Section 58.6091-1 also issued under 26

U.S.C. 6091(a);

Section 58.6107-1 also issued under 26

U.S.C. 6107;

Section 58.6109-1 also issued under 26

U.S.C. 6109(a);

Section 58.6151-1 also issued under 26

U.S.C. 6151;

Section 58.6694-1 also issued under 26

U.S.C. 6694;

Section 58.6695-1 also issued under 26

U.S.C. 6695;

Section 58.6696-1 also issued under 26

U.S.C. 6696.

Subpart A—[Reserved]

Subpart B—Procedure and

Administration

§58.6001-1 Notice or regulations

requiring records, statements, and

special returns.

(a) In general. Any covered corporation (as defined in section 4501(b) of

60

the Internal Revenue Code (Code)), or

any person treated as a covered corporation (as described in section 4501(d)

(1)(A) or (d)(2)(A)), that makes a repurchase (as defined in section 4501(c)(1)),

or that is treated as making a repurchase

under section 4501(c)(2)(A), (d)(1)(B), or

(d)(2)(B), must keep such complete and

detailed records as are sufficient to establish accurately the amount of repurchases,

adjustments, or exceptions required to be

shown by the covered corporation or person treated as a covered corporation in

any stock repurchase excise tax return (as

defined in §58.6011‑1(b)).

(b) Notice by IRS requiring returns,

statements, or the keeping of records.

The Internal Revenue Service (IRS) may

require any covered corporation or person

treated as a covered corporation, by notice

served upon such corporation or person,

to make such returns, render such statements, or keep such specific records as

will enable the IRS to determine whether

or not such corporation or person is liable

for tax under chapter 37 of the Code.

(c) Retention of records. The records

required by this section must be kept at all

times available for inspection by the IRS

and must be retained for so long as the

contents thereof may become material in

the administration of any internal revenue

law.

(d) Applicability date. This section

applies to repurchases, adjustments, or

exceptions required to be shown in any

stock repurchase excise tax return required

to be filed after June 28, 2024, and during

taxable years ending after June 28, 2024.

§58.6011-1 General requirement of

return, statement, or list.

(a) In general. Any covered corporation (as defined in section 4501(b) of

the Internal Revenue Code (Code)), or

any person treated as a covered corporation (as described in section 4501(d)(1)

(A) or (d)(2)(A)), other than a regulated

investment company (as defined in section

851 of the Code) or a real estate investment trust (as defined in section 856(a)

of the Code), that makes a repurchase (as

defined in section 4501(c)(1)), or that is

treated as making a repurchase under section 4501(c)(2)(A), (d)(1)(B), or (d)(2)

(B), after December 31, 2022, must file

Bulletin No. 2024–29

a stock repurchase excise tax return with

respect to any taxable year in which the

covered corporation or person treated as

a covered corporation makes a repurchase

or is treated as making a repurchase under

section 4501(c)(2)(A), (d)(1)(B), or (d)(2)

(B).

(b) Stock Repurchase Excise Tax

Return. For purposes of this part, the term

stock repurchase excise tax return means

the Form 720, Quarterly Federal Excise

Tax Return, due for the first full calendar

quarter after the end of the covered corporation’s taxable year, with an attached

Form 7208, Excise Tax on Repurchase

of Corporate Stock, or any other forms,

schedules, or statements prescribed by the

Commissioner for the purpose of making

a return to report the tax under chapter 37

of the Code.

(c) [Reserved]

(d) Applicability date. This section

applies to stock repurchase excise tax

returns required to be filed after June 28,

2024, and during taxable years ending

after June 28, 2024.

§58.6060-1 Reporting requirements for

tax return preparers.

(a) In general. A person that engages

or employs one or more signing tax return

preparers (as defined in §301.7701-15(b)

(1) of this chapter) to prepare a stock

repurchase excise tax return (as defined

in §58.6011-1(b)) or claim for refund of

tax under chapter 37 of the Internal Revenue Code, other than for the person, at any

time during a return period, must satisfy

the recordkeeping and inspection requirements in the manner stated in §1.6060-1

of this chapter.

(b) Applicability date. This section

applies to stock repurchase excise tax

returns and claims for refund required to

be filed after June 28, 2024, and during

taxable years ending after June 28, 2024.

§58.6061-1 Signing of returns and

other documents.

(a) In general. Any stock repurchase

excise tax return (as defined in §58.60111(b)), statement, or other document

required to be made with respect to the

tax imposed by chapter 37 of the Internal Revenue Code must be signed by the

Bulletin No. 2024–29

person required to file the return, statement, or other document, or by the persons required or duly authorized to sign

in accordance with the regulations, forms,

or instructions prescribed with respect to

such return, statement, or document. An

individual’s signature on such a return,

statement, or other document is prima

facie evidence that the individual is authorized to sign the return, statement, or other

document.

(b) Applicability date. This section

applies to stock repurchase excise tax

returns, statements, or other documents

that are required to be made with respect

to the tax imposed by chapter 37 and

required to be filed after June 28, 2024,

and during taxable years ending after June

28, 2024.

§58.6065-1 Verification of returns.

(a) In general. If either a stock repurchase excise tax return (as defined in

§58.6011-1(b)), statement, or other document made with respect to any tax

imposed by chapter 37 of the Internal

Revenue Code, or the related form and

instructions, requires that such return,

statement, or other document contain or

be verified by a written declaration that

it is made under the penalties of perjury,

then it must be so verified by the person or

persons required to sign such return, statement, or other document. In addition, any

other statement or document submitted

under any provision of chapter 37, subtitle F, or regulations under this part with

respect to any tax imposed by chapter 37

may be required to contain or be verified

by a written declaration that it is made

under the penalties of perjury.

(b) Applicability date. This section

applies to stock repurchase excise tax

returns, statements, or other documents

that are required to be made with respect

to the tax imposed by chapter 37 and

required to be filed after June 28, 2024,

and during taxable years ending after

June 28, 2024.

§58.6071-1 Time for filing returns.

(a) In general. Except as provided

in paragraph (c) of this section, a stock

repurchase excise tax return required by

§58.6011-1(a) must be filed by the due

61

date of the Form 720, Quarterly Federal Excise Tax Return, that is for the

first full calendar quarter after the end

of the taxable year of the covered corporation (as defined in section 4501(b) of

the Internal Revenue Code (Code)), or

person treated as a covered corporation

(as described in section 4501(d)(1)(A)

or (d)(2)(A)).

(b) Example. Corporation X is a covered corporation with a taxable year that

ends on December 31. During its 2024

taxable year, Corporation X makes a

repurchase within the meaning of section

4501(c)(1). Because Corporation X’s taxable year ends in the fourth quarter of the

calendar year, Corporation X must file a

stock repurchase excise tax return reporting liability for the tax imposed by chapter 37 of the Code by the due date for a

first-quarter Form 720 (that is, April 30,

2025).

(c) Taxable years ending on or before

June 28, 2024. With respect to a covered corporation, or person treated as a

covered corporation, with a taxable year

ending after December 31, 2022, and

on or before June 28, 2024, the stock

repurchase excise tax return required

by §58.6011-1(a) for such taxable year

must be filed by the due date of the Form

720 for the first full calendar quarter

after June 28, 2024. If a covered corporation, or person treated as a covered

corporation, has more than one taxable

year ending after December 31, 2022,

and on or before June 28, 2024, the covered corporation, or person treated as a

covered corporation, should file a single Form 720 with two separate Forms

7208, Excise Tax on Repurchase of Corporate Stock (one for each taxable year)

attached.

(d) Example. Corporation Y is a covered corporation with a taxable year ending December 31, 2023. During its 2023

taxable year, Corporation Y makes a

repurchase within the meaning of section

4501(c)(1). Corporation Y is required to

file the stock repurchase excise tax return

for its 2023 taxable year by the due date

of the Form 720 for the first full calendar

quarter after June 28, 2024. The due date

for the Form 720 for the first full calendar quarter after June 28, 2024 (that is, the

third quarter Form 720), is October 31,

2024.

July 15, 2024

(e) Applicability date. This section

applies to stock repurchase excise tax

returns required to be filed after June 28,

2024, and during taxable years ending

after June 28, 2024.

§58.6091-1 Place for filing tax returns

under chapter 37 of the Internal

Revenue Code.

(a) In general. Except as provided in

paragraphs (b) and (c) of this section, stock

repurchase excise tax returns required by

§58.6011-1(a) must be filed in accordance

with the instructions applicable to such

returns.

(b) Hand-carried returns. Notwithstanding paragraph (a) of this section,

stock repurchase excise tax returns that

are filed by hand carrying must be filed

with any person assigned the responsibility to receive hand-carried returns in

the local Internal Revenue Service (IRS)

office that serves the principal place of

business, principal office, or agency of the

taxpayer.

(c) Exceptional cases. Notwithstanding

paragraph (a) of this section, the Commissioner may permit the filing of any stock

repurchase excise tax return in any local

IRS office.

(d) Applicability date. This section

applies to stock repurchase excise tax

returns required to be filed after June 28,

2024, and during taxable years ending

after June 28, 2024.

§58.6107-1 Tax return preparer must

furnish copy of return or claim for

refund to taxpayer and must retain a

copy or record.

(a) In general. A person who is a signing tax return preparer (as defined in

§301.7701-15(b)(1) of this chapter) of

any stock repurchase excise tax return

required by §58.6011-1(a) or claim for

refund of tax under chapter 37 of the

Internal Revenue Code must furnish a

completed copy of the stock repurchase

excise tax return or claim for refund to

the taxpayer and retain a completed

copy or record in the manner stated in

§1.6107-1 of this chapter.

(b) Applicability date. This section

applies to stock repurchase excise tax

July 15, 2024

returns and claims for refund required to

be filed after June 28, 2024, and during

taxable years ending after June 28, 2024.

§58.6109-1 Tax return preparers

furnishing identifying numbers for

returns or claims for refund.

(a) In general. Each stock repurchase

excise tax return required by §58.60111(a) or claim for refund of tax under chapter 37 of the Internal Revenue Code prepared by one or more signing tax return

preparers (as defined in §301.7701-15(b)

(1) of this chapter) must include the identifying number of the preparer required

by §1.6695-1(b) of this chapter to sign

the stock repurchase excise tax return or

claim for refund in the manner stated in

§1.6109-2 of this chapter.

(b) Applicability date. This section

applies to stock repurchase excise tax

returns and claims for refund required to

be filed after June 28, 2024, and during

taxable years ending after June 28, 2024.

§58.6151-1 Time and place for paying

of tax shown on returns.

(a) In general. The tax shown on

any stock repurchase excise tax return

required by §58.6011-1(a) must, without

assessment or notice and demand, be paid

to the Internal Revenue Service at the time

and place for filing such stock repurchase

excise tax return. For provisions relating

to the time and place for filing the stock

repurchase excise tax return required

under §58.6011-1(a), see §§58.6071-1 and

58.6091-1.

(b) Applicability date. This section

applies to payments of stock repurchase

excise tax required to be paid after June

28, 2024, and during taxable years ending after June 28, 2024.

§58.6694-1 Section 6694 penalties.

(a) Penalties applicable to tax

return preparer. For general definitions

regarding penalties under section 6694

of the Internal Revenue Code (Code)

applicable to preparers of tax returns or

claims for refund of tax under chapter

37 of the Code, see §1.6694-1 of this

chapter.

62

(b) Penalties for understatement due to

an unreasonable position. A person who is

a tax return preparer of any return or claim

for refund of tax under chapter 37 may be

subject to penalties under section 6694(a)

in the manner stated in §1.6694-2 of this

chapter.

(c) Penalties for understatement due

to willful, reckless, or intentional conduct. A person who is a tax return preparer

of any return or claim for refund of tax

under chapter 37 may be subject to penalties under section 6694(b) in the manner

stated in §1.6694-3 of this chapter.

(d) Extension of period of collection

when tax return preparer pays 15 percent of a penalty for understatement of

taxpayer’s liability and certain other

procedural matters. The rules under

§1.6694-4 of this chapter, relating to the

extension of period of collection when

a tax return preparer who prepared a

return or claim for refund of tax pays 15

percent of a penalty for understatement

of taxpayer’s liability and to procedural

matters regarding the investigation,

assessment, and collection of the penalties under sections 6694(a) and (b),

apply to a tax return preparer who prepared a return or claim for refund for tax

under chapter 37.

(e) Applicability date. This section

applies to returns and claims for refund

filed, and advice provided, after June 28,

2024, and during taxable years ending

after June 28, 2024.

§58.6695-1 Other assessable penalties

with respect to the preparation of tax

returns or claims for refund for other

persons.

(a) In general. A person who is a tax

return preparer of any return or claim

for refund of tax under chapter 37 of the

Internal Revenue Code (Code) may be

subject to penalties for failure to furnish

a copy to the taxpayer under section

6695(a) of the Code, failure to sign the

return under section 6695(b), failure to

furnish an identifying number under section 6695(c), failure to retain a copy or

list under section 6695(d), failure to file

a correct information return under section 6695(e), and endorsement or negotiation of a check under section 6695(f),

Bulletin No. 2024–29

in the manner stated in §1.6695-1 of this

chapter.

(b) Applicability date. This section

applies to returns and claims for refund

filed after June 28, 2024, and during taxable years ending after June 28, 2024.

§58.6696-1 Claims for credit or refund

by tax return preparers.

for credit or refund by a tax return preparer who prepared a return or claim for

credit or refund for tax under chapter 37

of the Internal Revenue Code.

(b) Applicability date. This section

applies to returns and claims for credit or

refund filed, and advice provided, after

June 28, 2024, and during taxable years

ending after June 28, 2024.

(a) In general. The rules under

§1.6696-1 of this chapter apply to claims

Douglas W. O’Donnell,

Deputy Commissioner.

Bulletin No. 2024–29

63

Approved: June 24, 2024.

Aviva R. Aron-Dine,

Acting Assistant Secretary of

the Treasury (Tax Policy).

(Filed by the Office of the Federal Register June 28,

2024, 4:15 p.m., and published in the issue of the

Federal Register for July 3, 2024, 89 FR 55045)

July 15, 2024

Part III

Transitional Relief Under

Sections 3403, 3406,

6721, 6722, 6651, and

6656 with Respect to the

Reporting of Information

and Backup Withholding on

Digital Assets by Brokers

under Section 6045

Notice 2024-56

SECTION 1. PURPOSE

This notice provides transitional relief

from penalties for brokers who fail to

report sales of digital assets, as defined

in § 1.6045-1(a)(19)1 other than digital

assets not required to be reported as digital assets pursuant to § 1.6045-1(c)(8)(ii),

(iii), or (iv), on information returns (Form

1099-DA, Digital Asset Proceeds From

Broker Transactions), or fail to furnish

payee statements, under section 6045. The

penalty relief provided by this notice is

available for information returns required

to be filed and payee statements required

to be furnished in 2026 for sales of digital

assets effected in calendar year 2025, provided that the broker makes a good faith

effort to file the appropriate information

return and furnish the associated payee

statement accurately.

In addition, this notice provides transitional relief from the liability for the payment of backup withholding tax required

to be withheld under section 3406 and

its accompanying regulations as well as

from penalties for brokers who fail to

pay that tax with respect to certain sales

of digital assets required to be reported

under section 6045. Specifically, this

notice provides certain relief from penalties and backup withholding: (1) for any

sale of a digital asset effected by a broker

during calendar year 2025; (2) for any

sale of a digital asset effected by a broker

during calendar year 2026 for a customer

(payee) if the broker submits that payee’s

name and tax identification number (TIN)

combination to the Internal Revenue Service’s (IRS) TIN Matching Program and

receives a response that the name and

TIN combination furnished by the payee

matches the name and TIN combination

for that payee in IRS records; (3) for any

sale of a digital asset effected by a broker in return for specified nonfungible

tokens (specified NFTs); (4) for any digital asset for real property sale effected

by a real estate reporting person; and (5)

for certain sales of digital assets effected

by processors of digital asset payments

(PDAPs).

This notice also provides transitional

relief from penalties for brokers who

fail to backup withhold and pay the full

backup withholding tax due if such failure is due to a decrease in the value of

withheld digital assets in a sale of digital

assets in return for different digital assets

effected on or before December 31, 2026,

and the broker immediately liquidates the

withheld digital assets for cash.

Finally, this notice sets forth when a

broker may treat another broker as a U.S.

digital asset broker under § 1.6045-1(c)

(3)(i)(C)(3) prior to the publication of a

revised Form W-9, Request for Taxpayer

Identification Number and Certification,

providing for the certification of U.S. digital asset broker status.

SECTION 2. BACKGROUND

.01 Section 6045 and Final Regulations

Section 6045(a) provides that every

person doing business as a broker shall

make a return to the IRS showing the

name and address of each customer, with

details regarding gross proceeds and other

information as required. These rules apply

when required by the Secretary of the

Treasury or her delegate (Secretary) and

in accordance with regulations prescribed

by the Secretary. Other subsections of

section 6045 require a broker to furnish a

payee statement to customers, define the

term broker, require basis reporting for

specified securities that are also covered

securities, and provide other applicable

rules.

Section 80603 of the Infrastructure

Investment and Jobs Act, Pub. L. No.

117-58, 135 Stat. 429, 1339 (2021) (Infrastructure Act) made several changes to the

broker reporting provisions under section

6045 to clarify the rules regarding how

certain digital asset transactions should

be reported by brokers and to expand the

categories of assets for which basis reporting is required to include all digital assets.

On June 28, 2024, final regulations (TD

10000) were filed for public inspection

with the Federal Register (89 FR 56480)

(final regulations) to require brokers,

including certain digital asset trading

platforms, certain PDAPs, certain digital

asset hosted wallet providers, and digital

asset kiosks, to file information returns

and furnish payee statements reporting

gross proceeds and in certain circumstances adjusted basis on sales of digital

assets effected for customers beginning

for sales of digital assets effected on or

after January 1, 2025. For purposes of the

final regulations and this notice, a sale of

a digital asset includes a disposition of a

digital asset in return for cash and different digital assets. Additionally, a sale of

a digital asset includes a disposition of a

digital asset in return for certain broker

services, securities and other property

that is otherwise subject to reporting, and

real estate if the sale is effected by a real

estate reporting person (real estate sale)

on or after January 1, 2026. Finally, a sale

of a digital asset also includes a payment

by a party of a digital asset to a PDAP in

return for the payment of that digital asset,

cash, or a different digital asset to a second

party, provided that the transaction is not

otherwise a sale (PDAP sale).

A broker is not required to make a

report of information with respect to a sale

effected for a customer that is an exempt

recipient. The final regulations added U.S.

digital asset brokers (other than certain

registered investment advisers) to the list

of exempt recipients, but do not permit a

broker to treat a customer as a U.S. digital asset broker unless the broker obtains

from that customer a certification on a

properly completed exemption certificate

Unless otherwise specified, all “section” or “§” references are to sections of the Internal Revenue Code, the Income Tax Regulations (26 CFR part 1), or to the Employment Taxes and

Collection of Income Tax at Source Regulations (26 CFR part 31).

1

July 15, 2024

64

Bulletin No. 2024–29

(as provided in § 31.3406(h)-3, generally a Form W-9) that the customer is a

U.S. digital asset broker. Additionally, if

more than one broker effects a sale of a

digital asset on behalf of a customer, the

broker responsible for first crediting the

gross proceeds on the sale to the customer’s wallet or account is required to report

the sale. The broker that did not first credit

the gross proceeds on the sale to the customer’s wallet or account is not required

to report the sale if prior to the sale that

broker obtains a certification on a properly completed exemption certificate that

the broker first crediting the gross proceeds on the sale is a U.S. digital asset

broker (other than a registered investment

adviser) (multiple broker rule).

.02 Sections 6721, 6722, and 6724

Section 6721 imposes a penalty for

any failure to file an information return on

or before the required filing date, and for

any failure to include all the information

required to be shown on a return or the

inclusion of incorrect information. Section 6724(d)(1)(B)(iii) defines an information return for this purpose as a return

required by section 6045(a) or (d).

Section 6722 imposes a penalty for

any failure to furnish a payee statement

on or before the required furnishing date

to the person to whom such statement is

required to be furnished, and for any failure to include all the information required

to be shown on a payee statement or the

inclusion of incorrect information. Section

6724(d)(2)(H) defines a payee statement

for this purpose as a statement required by

section 6045(b) or (d).

Section 6724 provides that no penalty

shall be imposed under sections 6721 and

6722 if the filer (payor) shows that the

failure was due to reasonable cause and

was not due to willful neglect.

.03 Sections 3403 and 3406

Section 3406(a)(1) requires certain

payors of reportable payments to deduct

and withhold a tax on a payment at the

statutory backup withholding rate (backup

withholding tax) if the payee fails to furnish the payee’s TIN to the payor in the

manner required. Pursuant to section

3406(b)(3)(C), a reportable payment

includes payments made by a broker that

are required to be shown on an information return under section 6045. Section 1.6045-1(g)(1) provides an exception

Bulletin No. 2024–29

to a broker’s reporting of a sale effected

for a customer that is an exempt foreign

person. Under § 1.6045-1(g)(4)(ii)(B) and

(g)(4)(vi)(A)(1), a U.S. digital asset broker may treat a customer as an exempt

foreign person if the broker receives

valid documentation upon which it may

rely for this purpose (for example, Form

W-8BEN, Certificate of Foreign Status

of Beneficial Owner for United States

Tax Withholding and Reporting (Individuals)). Pursuant to §§ 31.3406(d)-1 and

31.3406(h)-3(a)(1), a payee that is not

an exempt foreign person must generally

furnish to the broker on a Form W-9 the

payee’s TIN and certify under penalties

of perjury that the furnished TIN is correct (certified TIN). However, to provide

additional time for brokers to collect the

necessary documentation to treat preexisting customers as exempt foreign persons

with respect to digital asset sales effected

prior to January 1, 2027, § 1.6045-1(g)(4)

(vi)(F) permits a broker to treat a customer

with an account established prior to January 1, 2026, as an exempt foreign person

if the customer has not been previously

classified as a U.S. person by the broker

and the information the broker has for the

customer includes a residence address that

is not a U.S. address.

Section 3406(a) provides that the current applicable rate of backup withholding

is the fourth lowest rate of tax applicable

under section 1(c) (currently 24 percent). A

payor is also required to report the amount

of backup withholding tax the payor withheld from the payee on Form 945, Annual

Return of Withheld Federal Income Tax,

and on the information return filed with

the IRS and furnished to the payee. In the

case of the Form 1099-DA, once approved

by the Office of Management and Budget

(OMB) for information collection under

the Paperwork Reduction Act, the backup

withholding tax withheld from the payee

will be required to be reported in accordance with the instructions for that form.

The payee may then report this tax as an

income tax payment on the payee’s Federal income tax return.

Section 3406(a)(1)(B) also requires

the payor to deduct and withhold the

backup withholding tax if the IRS notifies the payor that the payee has provided

an incorrect name and TIN combination.

The IRS notifies a payor of an incorrect

65

name and TIN combination by sending

the payor a CP2100 Notice, Please Check

Your Backup Withholding List (“Large”

Payers), or a CP2100A Notice, Please

Check Your Backup Withholding, Contact

Your Payee, and/or Update Your Records.

The CP2100 and CP2100A Notices list

each payee with an incorrect name and

TIN combination reported on information

returns filed by the payor. Upon receiving

a CP2100 Notice or a CP2100A Notice,

payors must send a copy of the notice

identifying the incorrect name and TIN

combination to the payee and request a

corrected TIN (or name) from the payee

before beginning backup withholding. See

§ 31.3406(d)-5 (describing these procedures, which are commonly known as B

Notice procedures).

Section 3406(h)(10) provides that payments subject to withholding under section 3406 shall be treated as if they were

wages paid by an employer to an employee

and amounts deducted and withheld under

section 3406 shall be treated as if deducted

and withheld under section 3402. Accordingly, a payor of reportable payments subject to backup withholding under section

3406 is liable under section 3403 for the

payment of the backup withholding tax

required to be withheld.

.04 TIN Matching Program

Section 31.3406(j)-1(a) provides that

the Commissioner of Internal Revenue

(Commissioner) has the authority to establish TIN matching programs and may prescribe by revenue procedure or other guidance the scope and terms and conditions

for participating in such programs.

Section 31.3406(j)-1(b) provides that

none of the matching details received by

a payor through a matching program will

constitute an IRS notification regarding

incorrect name and TIN combination for

purposes of imposing backup withholding

under section 3406(a)(1)(B).

Section 31.3406(j)-1(d) provides that

the IRS will not use a payor’s decision

not to participate in the TIN Matching

Program as a basis to assert that the payor

lacks reasonable cause under section

6724(a) for failure to file a correct information return under section 6721 or to

furnish a correct payee statement under

section 6722.

Revenue Procedure 97-31, 1997-26

I.R.B. 6 (June 30, 1997), established pro-

July 15, 2024

cedures under which Federal agencies

could submit the payee name and TINs

and the IRS would inform the agency

whether the names and TINs matched

the information in the IRS’s database for

the program. Revenue Procedure 2003-9,

2003-8 I.R.B. 516 (February 24, 2003),

established a TIN Matching Program

that permits payors to verify name and

TIN combinations provided by payees

that are required to be reported on information returns and payee statements. To

participate in the TIN Matching Program,

the payor must complete an application.

Then, prior to filing an information return,

a TIN Matching Program participant may

check the name and TIN combination

furnished by the payee against the name

and TIN combination contained in the

IRS-maintained database. More information is available at https://www.irs.

gov/tax-professionals/taxpayer-identification-number-tin-matching. Publication

2108A, On-Line Taxpayer Identification

Number (TIN) Matching Program, has

complete program information.

.05 Sections 6651 and 6656

A payor who fails to withhold and pay

backup withholding tax when required

may be subject to civil penalties under sections 6651 and 6656. Section 6651 generally imposes an addition to the tax owed

by a taxpayer for the failure to pay the

amount shown as tax, including backup

withholding tax, on a return required to

be filed by the taxpayer unless the failure

is due to reasonable cause and not due to

willful neglect. Section 6656 provides that

in the case of any failure by any person

to deposit taxes on the prescribed date in

an authorized government depository, a

penalty applies unless the failure is due

to reasonable cause and not due to willful

neglect. A failure to deposit backup withholding tax as required under section 6302

would generally subject a payor to the section 6656 penalty.

SECTION 3. DISCUSSION

.01 Sales Effected in Calendar Year

2025

The final regulations under section

6045 require brokers to make information

returns and furnish payee statements with

respect to sales of digital assets effected

on or after January 1, 2025. Sections 6721

July 15, 2024

and 6722 are applicable to brokers that

fail to file those information returns and

furnish those payee statements. In order to

provide brokers additional time to develop

appropriate procedures to comply with the

reporting requirements described in the

final regulations, which apply to sales of

digital assets effected on or after January

1, 2025, the IRS will not impose penalties

under sections 6721 and 6722 on brokers

that fail to file information returns and

furnish payee statements under the final

regulations with respect to sales of digital

assets effected during calendar year 2025,

provided that such brokers make good

faith efforts to file accurate and timely

Forms 1099-DA and furnish accurate and

timely payee statements. For purposes

of this notice, good faith efforts do not

include any filing of returns or furnishing

of payee statements made by the broker

after the later of the date that the IRS first

contacts the broker concerning an examination of such broker or one year after the

original due date for filing such returns.

The final regulations under section 3406

and § 31.3406(b)(3)-2 apply to reportable

payments by a broker to a payee with

respect to sales of digital assets on or after

January 1, 2025, that are required to be

reported under section 6045. Because the

final regulations require brokers to report

digital asset sales effected during calendar

year 2025 and because brokers may not

have enough time to obtain a certified TIN

from a payee prior to the date of a digital

asset sale by that payee during 2025 that

is subject to reporting, the Department of

the Treasury (Treasury Department) and

the IRS are postponing the application of

backup withholding with respect to sales

of digital assets for an additional year to

provide brokers with additional time to

develop appropriate procedures for collecting certified TINs from customers

and to otherwise comply with the backup

withholding requirements on digital asset

sales. Accordingly, backup withholding

under section 3406 will not be required on

any digital asset sale effected by brokers

during calendar year 2025.

.02 Sales Effected in Calendar Year

2026

Section 3406 backup withholding

applies to reportable digital asset sales if

the broker has not obtained the payee’s certified TIN. The IRS is aware that brokers

66

subject to section 6045 reporting for digital asset sales may experience challenges

in obtaining certified TINs from all payees

that are existing customers. Accordingly,

for digital asset sales effected in calendar

year 2026, the IRS will permit brokers to

rely on TINs provided by payees that are

not certified if those uncertified TINs were

provided by payees that opened accounts

with the broker prior to January 1, 2026,

(preexisting customers) and if the broker, prior to effecting the digital asset sale

transaction, submits the payee’s name and

TIN combination to the IRS’s TIN Matching Program and receives a response that

the name and TIN combination furnished

by the payee matches the name and TIN

combination for that payee in the IRS

records. See § 1.6045-1(g)(4)(vi)(F)

discussed in section 2.03 of this notice

regarding the relief provided to brokers

in treating certain customers with established accounts as exempt foreign persons

under certain circumstances.

.03 Sales of Digital Assets for Specified NFTs

The final regulations require brokers

to report sales of digital assets, including

sales of digital assets that are disposed of

in consideration for specified NFTs, on

Form 1099-DA. Section 1.6045-1(d)(10)

(iv)(A) and (B) provides that a specified

NFT is a digital asset that is indivisible

(that is, the digital asset cannot be subdivided into smaller units without losing its

intrinsic value or function) and unique as

determined by the inclusion in the digital

asset itself of a unique digital identifier,

other than a digital asset address, that distinguishes that digital asset from all other

digital assets (unique digital identifier). In

addition, § 1.6045-1(d)(10)(iv)(C) provides that, to be a specified NFT, the digital asset must not directly (or indirectly)

provide the holder with an interest in certain excluded property. The IRS is aware

that brokers effectuating sales of digital

assets in consideration for specified NFTs

may experience challenges satisfying their

backup withholding obligations because

the proceeds received by the payee with

respect to that sale is an indivisible specified NFT. Accordingly, the Treasury

Department and the IRS have determined

that backup withholding under section

3406 will not be required on any digital

asset sale effected by a broker where the

Bulletin No. 2024–29

reportable proceeds is a specified NFT

until further guidance is issued.

.04 Sales Effected by Real Estate

Reporting Persons

Section 1.6045-1(a)(9)(ii)(B) requires

real estate reporting persons to file and

furnish Form 1099-DA with respect to a

real property buyer that disposes of digital assets in full or partial consideration

for real property in a real estate transaction (digital asset for real property sale) if

the real estate reporting person has actual

knowledge, or ordinarily would know,

that digital assets were received by the

real estate seller. The IRS is aware that

real estate reporting persons effectuating

sales of digital assets in consideration

for real estate may experience challenges

satisfying their backup withholding obligations because the real estate reporting

persons generally do not have possession

of the real estate proceeds. Accordingly,

the Treasury Department and the IRS have

determined that backup withholding under

section 3406 will not be required on any

digital asset for real property sale effected

by a real estate reporting person until further guidance is issued.

.05 Certain Sales Effected by PDAPs

In the case of PDAP sales effected by

PDAPs, the Treasury Department and IRS

are aware that PDAPs generally do not

take custody of the proceeds, for example

goods or services acquired with digital

assets, and as such may experience difficulties deducting and withholding the

backup withholding tax. Accordingly, the

Treasury Department and the IRS have

determined that backup withholding under

section 3406 will not be required on any

PDAP sale effected by a PDAP until further guidance is issued.

.06 Amount of Backup Withholding

In the case of a sale of a digital asset

for different digital assets other than specified NFTs addressed in section 3.03 of

this notice, the Treasury Department and

the IRS are aware that brokers may need

time to implement new backup withholding procedures because the value of the

digital assets received in such sales can

change between the time of the transaction and the time the received digital

assets are liquidated into U.S. dollars

for depositing with the IRS. To provide

brokers additional time to develop appropriate procedures, the amount of backup

Bulletin No. 2024–29

withholding tax required to be withheld

and paid as a tax under section 3406 shall

be limited to the amount that the broker

receives upon the liquidation of 24 percent of the customer’s received digital

assets, notwithstanding that such amount

may be less than 24 percent of customer’s received digital assets at the time of

the transaction giving rise to the backup

withholding obligation, provided such

liquidation is undertaken immediately

after the transaction giving rise to the

backup withholding liability. The amount

that the broker receives upon liquidation

should be reported as Federal income tax

withheld on Form 1099-DA. This amount

should also be included on the broker’s

Form 945. Accordingly, the IRS will not

impose penalties under section 6651 or

6656 with respect to any decrease in the

value of received digital assets between

the time of the transaction giving rise to

the backup withholding obligation and

the time the broker liquidates 24 percent

of the received digital assets. Finally, the

IRS will not impose penalties on brokers

that are required to file Form 945 with

respect to the backup withholding tax

due as described in this section 3.06 with

respect to digital asset sales, provided the

broker pays and reports the amount of

backup withholding tax that is withheld

and deposited with the IRS in accordance

with this section 3.06. For this purpose,

a broker that systemically liquidates the

received digital assets when received as

part of its process to perform the underlying sale transaction will be treated as

immediately liquidating the received digital assets.

The relief provided by this section 3.06

applies only to the amount required to

be withheld and paid as described in this

section 3.06 and the requirement to file

information returns and payee statements

pertaining to reportable digital asset sales

effected before January 1, 2027.

.07 Treatment of Brokers as U.S. Digital Asset Brokers

The IRS is aware that the existing

Form W-9 does not provide a box that

would facilitate a broker obtaining certification from another broker that the

other broker is a U.S. digital asset broker

within the meaning of § 1.6045-1(g)(4)

(i)(A)(1) (other than a registered investment adviser) that is an exempt recipi-

67

ent under § 1.6045-1(c)(3)(i)(B)(12). To

allow a broker to treat a second broker

as a U.S. digital asset broker (other than

a registered investment adviser) prior to

the publication of a revised Form W-9,

the first broker may rely upon a written

statement that a second broker is a U.S.

digital asset broker within the meaning

of § 1.6045-1(g)(4)(i)(A)(1) (other than

a registered investment adviser) if the

written statement is associated with the

Form W-9, or is separately signed by that

second broker under penalties of perjury,

until one-year from the end of the month

shown as the revision date on the Form

W-9 that it is revised to accommodate

this certification.

SECTION 4. EFFECTIVE DATE

This notice is effective for digital asset

sales effected on or after January 1, 2025.

SECTION 5. DRAFTING

INFORMATION

The principal author of this notice is

the Office of the Associate Chief Counsel (Procedure and Administration). For

further information regarding this notice,

please call (202) 317-5436 (not a toll-free

number).

Reporting and Penalty

Relief for Brokers for

Certain Digital Asset

Transactions Under

Section 6045

Notice 2024-57

SECTION 1. PURPOSE

This notice provides that brokers are

not required to file information returns

and furnish payee statements with respect

to certain transactions involving digital

assets identified in this notice and that the

Internal Revenue Service (IRS) will not

assert penalties under section 6721 (failure to file correct information returns) or

section 6722 (failure to furnish correct

payee statements) of the Internal Revenue

July 15, 2024

Code (Code)1 with respect to these identified transactions.

SECTION 2. BACKGROUND

.01 Section 6045

Section 6045(a) provides that every

person doing business as a broker shall

make a return to the IRS showing the

name and address of each customer, with

details regarding gross proceeds and other

information as required. These rules apply

when required by the Secretary of the

Treasury or her delegate (Secretary) and

in accordance with regulations prescribed

by the Secretary. Brokers required to make

returns under section 6045 with respect to

digital assets do so by filing Form 1099DA, Digital Asset Proceeds From Broker

Transactions.

Section 80603 of the Infrastructure

Investment and Jobs Act, Pub. L. No.

117-58, 135 Stat. 429, 1339 (2021) (Infrastructure Act) made several changes to the

broker reporting provisions under section

6045 to clarify the rules regarding how

certain digital asset transactions should

be reported by brokers and to expand the

categories of assets for which basis reporting is required to include all digital assets.

On June 28, 2024, final regulations (TD

10000) were filed for public inspection

with the Federal Register (89 FR 56480)

(final regulations) to require brokers,

including certain digital asset trading platforms, certain processors of digital asset

payments, certain digital asset hosted wallet providers, and digital asset kiosks, to

file information returns and furnish payee

statements reporting gross proceeds and

in certain circumstances adjusted basis on

sales of digital assets effected for customers.

Section 1.6045-1(c)(2) provides that

a broker generally is required to make

an information return for each sale by a

customer of the broker if, in the ordinary

course of a trade or business in which the

broker stands ready to effect sales to be

made by others, the broker effects the sale

or closes the short position opened by the

sale.

Section 6045(c) defines a broker to

include a dealer, a barter exchange, any

1

person who (for consideration) regularly acts as a middleman with respect

to property or services, and any person

who (for consideration) is responsible for

regularly providing any service effectuating transfers of digital assets on behalf

of another person. Pursuant to § 1.60451(a)(1), the term broker includes any person that in the ordinary course of a trade

or business stands ready to effect sales

made by others. Sections 1.6045-1(a)(10)

and (21) define, in part, the term effect

to mean, with respect to a sale, to act as:

an agent for a party wherein the nature

of the agency is such that the agent ordinarily would know the gross proceeds

from the sale; an obligor retiring its own

debt obligations, a corporation redeeming its own stock, or an issuer of digital assets redeeming those issued digital

assets; a principal that is a dealer; or a

digital asset middleman who provides a

facilitative service.

Section 1.6045-1(a)(9)(i) defines the

term sale to include any disposition of

securities, commodities, options, regulated futures contracts, securities futures

contracts, or forward contracts, and

includes a redemption of stock, a retirement of debt instruments, and entering

into short sales, but only to the extent any

of these actions are conducted for cash.

Section 1.6045-1(a)(9)(ii) defines the

term sale to also include any disposition

of a digital asset in exchange for cash or

stored-value cards; any disposition of digital assets in exchange for a different digital asset; and the delivery of a digital asset

pursuant to the settlement of a forward

contract, option, regulated futures contract, any similar instrument, or any other

executory contract which would be treated

as a sale of a digital asset if the contract

had not been executory.

Section 6045(g)(3)(D) and § 1.60451(a)(19) define the term digital asset to

mean any digital representation of value

that is recorded on a cryptographically

secured distributed ledger (or any similar

technology), without regard to whether

each individual transaction involving that

digital asset is recorded on that ledger, and

that is not cash.

.02 Sections 6721 and 6722

Section 6721 imposes a penalty for

any failure to file an information return on

or before the required filing date, and for

any failure to include all the information

required to be shown on a return or the

inclusion of incorrect information. Section 6724(d)(1)(B)(iii) defines an information return for this purpose as a return

required by section 6045(a) or (d).

Section 6722 imposes a penalty for

any failure to furnish a payee statement

on or before the required furnishing date

to the person to whom such statement is

required to be furnished, and for any failure to include all the information required

to be shown on a payee statement or the

inclusion of incorrect information. Section

6724(d)(2)(H) defines a payee statement

for this purpose as a statement required by

section 6045(b) or (d).

SECTION 3. SCOPE

.01 The Treasury Department and the

IRS have determined that certain digital

asset transactions identified in sections

3.02, 3.03, 3.04, 3.05, 3.06, and 3.07 of

this notice (identified transactions) require

further study to determine how to facilitate appropriate reporting. Accordingly,

until that determination is made, brokers are not required to make a return on

these identified transactions under section 6045(a), and the IRS will not impose

penalties under section 6721 or section

6722 for failure to file correct information

returns or failure to furnish correct payee

statements with respect to these identified transactions. The description of the

transactions in sections 3.02, 3.03, 3.04,

3.05, 3.06, and 3.07 does not constitute or

reflect a substantive analysis for Federal

income tax purposes of any of the identified transactions or their component steps

and no inference is intended as to how an

identified transaction, or its component

steps, is treated for substantive Federal

income tax purposes. The descriptions are

provided solely for the purpose of describing the scope of the identified transactions

covered by sections 3.02, 3.03, 3.04, 3.05,

3.06, and 3.07 of this notice and solely

for purposes of determining the application of the broker reporting requirements

Unless otherwise specified, all “section” or “§” references are to sections of the Internal Revenue Code or the Income Tax Regulations (26 CFR part 1).

July 15, 2024

68

Bulletin No. 2024–29

under section 6045 pursuant to this notice.

The inclusion of a transaction in section

3.02, 3.03, 3.04, 3.05, 3.06, or 3.07 of this

notice is not intended to create an inference that the identified transaction is or is

not a sale of a digital asset or that it would

be required to be reported under section

6045(a) but for this notice.

.02 Wrapping and unwrapping transactions.

(1) An identified transaction described

in this section 3.02 is:

(a) The transfer of a single type of digital asset that is native to one cryptographically-secured distributed ledger (or that

cannot be used in certain automatically

executing contracts) (digital asset A)

in return for another digital asset (digital asset B) that is: (i) redeemable solely

for digital asset A except as provided in

section 3.02(1)(b) of this notice; and (ii)

identical to digital asset A except that it is

“wrapped” using an automatically executing contract (which may be referred to as

a “smart contract”) or similar technology

allowing it to be digitally represented and

tradeable on a cryptographically-secured

distributed ledger other than the one to

which digital asset A is native (or that can

be used in the smart contracts that digital

asset A could not be used in); and

(b) The transfer or redemption of digital asset B described in section 3.02(1)

(a) of this notice in return for digital

asset A described in such section, regardless of whether airdrops or other digital

assets attributable to the possession of

digital asset A prior to such a transfer or

redemption are also received or credited

for the period during which digital asset

A was wrapped in a transaction described

in section 3.02(1)(a) of this notice. The

processes described in section 3.02(1)(a)

and this paragraph (1)(b) may be referred

to as “wrapping” and “unwrapping” or as

exchanging a “wrapped digital asset” for

an “unwrapped digital asset of the same

type” and vice versa.

(2) The treatment of a transfer or

redemption transaction described in section 3.02(1)(b) of this notice does not

affect whether the receipt or crediting of

airdrops, or other digital assets attributable to the possession of digital asset A

for the period during which digital asset A

was wrapped in a transaction described in

section 3.02(1)(a) of this notice, should be

Bulletin No. 2024–29

treated as otherwise subject to information

reporting under another Code section as

rent, salaries, wages, premiums, annuities,

compensations, remunerations, emoluments, interest, or other fixed or determinable income.

.03 Liquidity provider transactions.

(1) An identified transaction described

in this section 3.03 is:

(a) The transfer of one or more digital

assets (for example, digital assets C and D)

into an automatically executing contract

and receipt of a different digital asset (digital asset L) that represents an interest in

a pool of those digital assets that are used

by an automatically executing contract to

facilitate the trading (or to facilitate what

digital asset market participants describe

as lending) of those digital assets in an

automated market maker system; and

(b) The redemption of digital asset L in

return for a proportional share of the digital assets in the pool, regardless of whether

the digital assets received or credited in

the redemption include the same proportion of the units of digital assets in the

pool that were previously deposited into

the automatically executing contract in a

transaction described in section 3.03(1)(a)

of this notice.

(2) The treatment of a redemption

transaction described in section 3.03(1)

(b) of this notice does not affect whether

the receipt or crediting of digital assets

or any other payment as compensation

for the use of units of digital assets transferred to the pool is otherwise subject to

information reporting under another Code

section as rent, salaries, wages, premiums,

annuities, compensations, remunerations,

emoluments, interest, or other fixed or

determinable income.

.04 Staking transactions.

(1) An identified transaction described

in this section 3.04 is:

(a)(i) The transfer of one digital asset

(digital asset E) into an automatically executing contract for the purpose of being

used as part of a proof-of-stake consensus mechanism to validate transactions

on a distributed ledger in return for the

opportunity to receive the transferred digital asset back plus validation rewards (if

any);

(a)(ii) The receipt of digital asset E

from the automatically executing contract

as described in section 3.04(1)(a)(i) of this

69

notice, regardless of whether the receipt

also includes the receipt or crediting of

additional digital assets as a validation

reward for the use of digital asset E that

was previously transferred into the automatically executing contract.

(b)(i) The transfer of one digital asset

(digital asset E) into an automatically

executing contract in return for a different digital asset (digital asset S) that represents an interest in a pool of digital asset

E that is used to validate transactions on

a distributed ledger as part of a proof-ofstake consensus mechanism; and

(b)(ii) The redemption of digital asset S

in return for a proportional share of digital

asset E, regardless of whether the redemption includes the receipt or crediting of

additional digital assets as a validation

reward for the use of digital asset E that

was previously transferred into an automatically executing contract as described

in section 3.04(1)(b)(i) of this notice.

(2) The treatment of a transfer or

redemption transaction described in section 3.04(1)(a)(ii) or (1)(b)(ii) of this

notice does not affect whether the receipt

or crediting of validation rewards for the

use of the disposed digital assets is otherwise subject to information reporting

under another Code section as rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments,

interest, or other fixed or determinable

income.

.05 Transactions described by digital

asset market participants as lending of

digital assets (type 1 transactions).

(1) An identified transaction described

in this section 3.05 is a transaction

described by digital asset market participants as lending of digital assets (type

1 transaction). In a type 1 transaction, a

taxpayer (the original digital asset owner)

transfers a digital asset to a third party

(transferee) either directly or indirectly

(such as through a centralized platform, or

through the use of an automatically executing contract), subject to an obligation

for the transferee to deliver the same type

of digital asset back to the original digital

asset owner in the future. At a later date,

the transferee delivers the same type of

digital asset to the original digital asset

owner. The transferee may also deliver

or credit additional digital assets or other

consideration to the original digital asset

July 15, 2024

owner as compensation for the use of the

digital asset during the type 1 transaction

or in respect of airdrops or other digital

assets received or credited with respect to

the obtained digital asset during the type 1

transaction.

(2) The treatment of a type 1 transaction described in section 3.05(1) of this

notice does not affect whether the delivery or crediting to the original digital

asset owner of airdrops, or other digital

assets attributable to the period during

which the original digital asset owner did

not hold the digital assets pursuant to the

type 1 transaction should be treated as

otherwise subject to information reporting under another Code section as rent,

salaries, wages, premiums, annuities,

compensations, remunerations, emoluments, interest, or other fixed or determinable income.

.06 Transactions described by digital

asset market participants as short sales of

digital assets (type 2 transactions).

(1) An identified transaction described

in this section 3.06 is a transaction

described by digital asset market participants as a short sale of digital assets (type

2 transaction). In a type 2 transaction, a

taxpayer obtains a digital asset from a

third party (original digital asset owner),

subject to an obligation to deliver the

same type of digital asset to the original

digital asset owner in the future. The taxpayer immediately sells the digital asset

to an unrelated market participant. To

satisfy its obligation to deliver the same

July 15, 2024

type of digital asset to the original digital asset owner, the taxpayer may buy a

replacement digital asset and deliver it to

the original digital asset owner. Alternatively, the taxpayer may instead deliver

a digital asset that it holds at that time

to the original digital asset owner. The

taxpayer may also deliver or credit additional digital assets or other consideration to the original digital asset owner as

compensation for the use of the obtained

digital asset (or in respect of airdrops

or other digital assets received or credited with respect to the obtained digital

asset) for the period between the time it

is obtained from the original digital asset

owner and the time when the same type

of unit is delivered to the original digital

asset owner.

(2) The treatment of a type 2 transaction described in section 3.06(1) of this

notice does not affect whether the delivery or crediting to the original digital asset

owner of consideration for the use of the

obtained digital asset, airdrops, or other

digital assets attributable to the period

during which the original digital asset

owner did not hold the digital assets pursuant to the type 2 transaction should be

treated as otherwise subject to information

reporting under another Code section as

rent, salaries, wages, premiums, annuities,

compensations, remunerations, emoluments, interest, or other fixed or determinable income.

.07 Notional principal contract transactions.

70

An identified transaction described in

this section 3.07 is the transfer of a digital asset as a payment under, or on sale

of, assignment of, or similar transaction

with respect to a notional principal contract as defined in § 1.446-3 (whether or

not the notional principal contract itself is

a digital asset). An identified transaction

described in this section 3.07 also includes

a termination of a notional principal contract that is a digital asset.

SECTION 4. EFFECTIVE DATE

This notice is effective for identified

transactions occurring on or after January

1, 2025.

SECTION 5. DRAFTING

INFORMATION

The principal author of this notice is

the Office of the Associate Chief Counsel

(Procedure and Administration). For further information regarding sections 3.02,

3.03, and 3.04 of this notice contact the

Office of the Associate Chief Counsel

(Income Tax and Accounting) at (202)

317-4718. For further information regarding sections 3.05, 3.06, and 3.07 of this

notice, contact the Office of the Associate

Chief Counsel (Financial Institutions and

Products) at (202) 317-4520. For further

information regarding the reporting rules,

contact the Office of the Associate Chief

Counsel (Procedure and Administration)

at (202) 317-5436 (not toll-free numbers).

Bulletin No. 2024–29

Part IV

Deletions From Cumulative

List of Organizations,

Contributions to Which are

Deductible Under Section

170 of the Code

Announcement 2024-29

Table of Contents

The Internal Revenue Service has

revoked its determination that the organizations listed below qualify as organizations described in sections 501(c)(3) and

170(c)(2) of the Internal Revenue Code of

1986.

Generally, the IRS will not disallow

deductions for contributions made to a

listed organization on or before the date

of announcement in the Internal Revenue

Bulletin that an organization no longer

qualifies. However, the IRS is not precluded from disallowing a deduction for

any contributions made after an organization ceases to qualify under section 170(c)

(2) if the organization has not timely filed

a suit for declaratory judgment under section 7428 and if the contributor (1) had

knowledge of the revocation of the ruling

or determination letter, (2) was aware that

such revocation was imminent, or (3) was

in part responsible for or was aware of the

activities or omissions of the organization

that brought about this revocation.

Name Of Organization

Dialysis Center of Northwest Jersey

Bulletin No. 2024–29

If on the other hand a suit for declaratory judgment has been timely filed,

contributions from individuals and organizations described in section 170(c)(2)

that are otherwise allowable will continue

to be deductible. Protection under section

7428(c) would begin on July 15, 2024, and

would end on the date the court first determines the organization is not described in

section 170(c)(2) as more particularly set

for in section 7428(c)(1). For individual

contributors, the maximum deduction protected is $1,000, with a husband and wife

treated as one contributor. This benefit is

not extended to any individual, in whole

or in part, for the acts or omissions of the

organization that were the basis for revocation.

Effective Date of Revocation

1/1/2020

71

Location

Succasunna, NJ

July 15, 2024

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

­effect:

Amplified describes a situation where

no change is being made in a prior published position, but the prior position is

being extended to apply to a variation of

the fact situation set forth therein. Thus,

if an earlier ruling held that a principle

applied to A, and the new ruling holds that

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

where the language in a prior ruling is

being made clear because the language

has caused, or may cause, some confusion. It is not used where a position in a

prior ruling is being changed.

Distinguished describes a situation

where a ruling mentions a previously published ruling and points out an essential

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions.

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

new ruling does more than restate the substance of a prior ruling, a combination of

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

restate the valid portion of the previously

published ruling in a new ruling that is

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

which a list, such as a list of the names of

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations

to show that the previous published rulings will not be applied pending some

future action such as the issuance of new

or amended regulations, the outcome of

cases in litigation, or the outcome of a

Service study.

Abbreviations

The following abbreviations in current

use and formerly used will appear in

material published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2024–29

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

i

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

July 15, 2024

Numerical Finding List1

Bulletin 2024–29

Announcements:

2024-26, 2024-27 I.R.B. 14

2024-27, 2024-27 I.R.B. 14

2024-28, 2024-28 I.R.B. 39

2024-29, 2024-29 I.R.B. 71

Notices:

2024-47, 2024-27 I.R.B. 1

2024-52, 2024-27 I.R.B. 2

2024-53, 2024-27 I.R.B. 4

2024-54, 2024-28 I.R.B. 24

2024-55, 2024-28 I.R.B. 31

2024-56, 2024-29 I.R.B. 64

2024-57, 2024-29 I.R.B. 67

Proposed Regulations:

REG-124593-23, 2024-28 I.R.B. 40

Revenue Procedures:

2024-26, 2024-27 I.R.B. 7

Revenue Rulings:

2024-13, 2024-28 I.R.B. 18

2024-14, 2024-28 I.R.B. 18

Treasury Decisions:

10002, 2024-29 I.R.B. 56

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2024–27 through 2024–52 is in Internal Revenue Bulletin

2024–52, dated December 30, 2024.

1

July 15, 2024

ii

Bulletin No. 2024–29

Finding List of Current Actions on

Previously Published Items1

Bulletin 2024–29

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2024–27 through 2024–52 is in Internal Revenue Bulletin

2024–52, dated December 30, 2024.

1

Bulletin No. 2024–29

iii

July 15, 2024

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

INTERNAL REVENUE BULLETIN

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