The Internal Revenue Service (IRS) has released a preview of the new Form 1099-DA, which will be used by cryptocurrency brokers to record transactions involving digital assets. This form is part of the IRS’s efforts to enhance compliance and ensure accurate reporting of income from digital assets.
Key Points:
– Form 1099-DA will be in use by the beginning of 2025 for brokers to report transactions involving digital assets.
– Brokers will be required to disclose information such as token codes, wallet addresses, and blockchain transaction locations.
– The IRS aims to identify taxpayers with potentially unreported transactions through this reporting requirement.
– The form includes data elements like acquisition date, sale date, proceeds, and cost basis of crypto assets sold.
– The IRS plans to include unhosted wallets within the definition of a broker, requiring KYC information for users.
– Feedback on the draft form is welcomed by the IRS, as it may be subject to modifications based on public input.
In conclusion, the issuance of Form 1099-DA by the IRS signifies a significant step in regulating and reporting revenue from digital asset transactions. Taxpayers should be aware of their reporting responsibilities to avoid penalties or audits as the digital asset landscape evolves.
