IRS Introduces New 1099-DA Tax Form for Digital Assets Starting 2025
After several drafts and 44,000 comments, the IRS’s new 1099-DA form is scheduled for implementation on January 1, 2026. Starting in 2025, brokers must track specific new information.
The definition of “brokers” generated significant discussion in 2023. Earlier drafts included a section to identify the “broker type,” which has since been removed. The IRS plans to issue guidance regarding DeFi participants in the future.
Beginning in 2025, custodial brokers will report gross proceeds, and by 2026, they will also report cost basis for certain transactions. Custodial brokers are exchanges like Coinbase that hold assets on behalf of clients and provide trading platforms.
Decentralized exchanges and NFT marketplaces are also subject to these requirements and may need to adjust their data collection processes in 2025.
For accountants managing crypto-holding clients, the 1099-DA form represents a shift. Taxpayers receiving these forms will have transaction history details, but custodial brokers may not automatically calculate cost basis information. Seth Wilks from the IRS emphasized the importance of asking clients the right questions when only gross proceeds are reported.
The objective of this system is to enhance taxpayer education on taxable transactions and streamline compliance. Transitioning to this new system may present challenges for CPAs.