IRS updates draft version of Form 1099-DA, Digital Asset Proceeds From Broker Transactions; requests comments on form planned for 2025

The Internal Revenue Service today posted an early draft of the updated Form 1099-DA, which is the form for brokers to report certain sale and exchange transactions of digital assets that take place beginning in calendar year 2025. Generally, these forms will be sent separately to taxpayers and the IRS in early 2026.

The new draft of Form 1099-DA, Digital Asset Proceeds From Broker Transactions PDF, reflects the final regulations for custodial broker reporting and includes the transitional relief described in Notice 2024-56, Notice 2024-57 and Revenue Procedure 2024-28. Interested parties can provide the IRS with comments about the draft at the forms and publications comments page on IRS.gov.

“This new form will provide more clarity for taxpayers and give them another tool to help them accurately report their digital assets transactions,” said IRS Commissioner Danny Werfel. “We know third-party reporting greatly improves compliance with the nation’s tax law. This step will also help us make sure digital assets are not used to hide taxable income, including in high-income categories, while providing taxpayers who play by the rules more information to accurately report their income.”

“Digital assets greatly increase the complexity of our tax system, and the IRS continues to work to make improvements in this area as part of our larger efforts to transform the agency,” Werfel added. “We will continue working this area to help ensure the tax laws are met while working to reduce burden wherever possible to help taxpayers in this challenging area.”

As part of the process that will lead to a final version of the form, the IRS posted the new draft of Form 1099-DA to IRS.gov along with the instructions for the recipients of the form. The IRS expects to post the draft instructions for filers soon. Once the draft filer instructions have been posted, a notice will be published in the Federal Register to allow for a 30-day comment period.

The IRS issued a news release at the end of June announcing the final regulations on the reporting requirements for custodial brokers regarding digital assets, while informing the public that the agency would soon release an updated form.

Source: IRS-2024-204, Aug. 9, 2024