Key Takeaways
- The 1099-DA form is a new IRS document specifically designed for reporting digital asset transactions.
- The IRS requires brokers (including crypto exchanges, payment processors, and some wallet providers) to use this form to report digital asset sales or exchanges to investors.
- The IRS released the final Form 1099-DA in January 2025. Brokers report gross proceeds for sales made from January 1, 2025, and cost basis for certain sales from January 1, 2026.
If you are someone who loves Bitcoin, crypto, NFTs, and anything in the Web3 space, you might want to stick around and read this article. Because yet again, the Internal Revenue Service (IRS) has made more changes to the 1099 in regard to the whole broker and dealer dilemma.
We will explain these changes, what you need to do, and how to navigate them.
What Is The 1099-DA?
1099 forms have been around for a long time. Think of them as a W-2 sent to the IRS and the recipient to inform them of exchanges of assets, receipts of payments, etcetera.
However, the 1099-DA is a new version of the 1099 form, built for digital asset trading. Treasury and the IRS proposed the reporting rules in August 2023; the IRS released a first draft of the form in April 2024 and the final form on January 10, 2025.
We have been using Form 8949 for a while. However, this new 1099 version provides a lot more detail. Let’s break it down.
Who Files 1099-DA?
Any entity considered a broker must file this new form. These include custodial exchanges, certain hosted wallet providers, crypto kiosks and certain payment processors. A separate December 2024 rule that would have covered some DeFi platforms was repealed in April 2025.
Who Is Going To File A 1099-DA On You?
Acquisitions are not included if you purchase any kind of digital property and are not involved in the 1099-DA system.
If you have received a form 1099-DA, it means that you have generally sold, exchanged, or otherwise disposed of a financial interest in a digital asset, and you should check the “Yes” box next to the question on page one of Form 1040.
Form 1099-DA Draft
The IRS released a draft of the 1099-DA in April 2024. The final form differs in places, as noted below, and we will go through each section.
Section one is where it starts getting challenging. One of the first things you will notice is that they want a code for the digital asset (1a and 1b). You will also notice that they are asking for the number of units (1c), the date and time acquired (1d), the date and time sold or disposed (1e), proceeds (1f), and cost or other basis (1g). The final form asks only for the dates, not the times.
This implies that this form will have to be generated every time you do a trade, which makes it very inconvenient for traders. Additionally, these brokers are sending this data in an electronic format.
In the draft, sections 11a and 11b asked for a sale transaction ID and a digital asset address, which concerned certified public accountants, as they did not see these as useful information compared with Form 8949, which gives you the opportunity to provide summary information. The final form dropped both fields.
What This Means For Traders And Brokers
The big problem here is going to be the reporting basis. The basis is basically what you are going to report to the IRS as the cost of the digital property that you are disposing of. This gets very complex depending on the accounting method that you are using, what year we are talking about, and how you are valuing the digital asset in the beginning.
Under the final rules, brokers report only gross proceeds for 2025 sales. From 2026, they also report basis, but only for covered securities: generally, digital assets acquired on or after January 1, 2026, and held with the same broker until it sells them. For older holdings, brokers don’t have to report basis, so tracking it is still up to you.
Where the IRS Form Stands Now
The big takeaway from the drafts was that the IRS was attempting to gather information but was not really sure what information it could legally or safely access. The form is now final: the IRS released it on January 10, 2025, and the first Forms 1099-DA, covering 2025 sales, were due to taxpayers in early 2026.
To know more about these rules, make sure to hire somebody in your local community who understands how all of these work.
