
Finalized Form 1099-DA, Digital Asset Proceeds for 2025
Do you hold digital assets? The Department of the Treasury (the Treasury) and Internal Revenue Service (IRS) have finalized a new reporting requirement for DeFi brokers designed to make tax filing easier for holders of cryptocurrencies, NFTs, tokenized real estate, etc. Here’s a breakdown of what these new rules entail and how they could impact your filing process.
What are the new regulations?
On December 27, 2024, the Treasury and IRS announced final regulations aimed at DeFi brokers which include digital trading platforms, payment processors, hosted wallet providers, as well as real estate entities that accept digital assets as payment for property transactions.
Form 1099-DA for digital asset transactions
Under the new regulations, beginning January 1, 2025, brokers will be required to report the gross proceeds from the sale of digital assets via the soon to be finalized Form 1099-DA, Digital Asset Proceeds. This new reporting requirement ensures that digital asset transactions are subject to the same reporting rules as securities and custodial digital asset trading platforms.
These rules are part of the broader efforts under the bipartisan Infrastructure Investment and Jobs Act (IIJA) to streamline tax reporting requirements.
How does this benefit taxpayers?
These changes are designed to reduce errors and noncompliance on federal income tax returns. By receiving Form 1099-DA, taxpayers will be reminded that their digital asset transactions are taxable. This should help save time and money during the filing process, reducing the likelihood of inadvertent mistakes.
No new tax obligations
It’s important to note that these regulations do not impose any new tax obligations on digital asset holders. Taxpayers have always been required to report gains from the sale or exchange of digital assets as part of their income. What the new rules do is shift the reporting requirements to brokers.
What’s next?
The modifications aim to limit the burdens on brokers while ensuring taxpayers and the IRS receive the necessary information. However, the transition to this new reporting requirement is expected to cause challenges for DeFi brokers who in most cases have not had time to implement reporting systems. For transactions occurring in calendar year 2025 (and reported in 2026), the IRS issued Notice 2024-56 which provides penalty relief for brokers to ease the transition.
It’s crucial for holders of cryptocurrencies and other digital assets to stay informed about these changes to ensure a smooth and compliant tax filing process. We will continue to monitor and update you on new and changing digital asset tax matters.
Questions specific to your digital asset tax obligations? Contact your Keiter Opportunity Advisor.
About the Author
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.