The U.S. Internal Revenue Service (IRS) has previewed what future tax forms for crypto investors will look like when controversial rules on how to report crypto transactions to the federal government are finalized.
The IRS proposed Draft 1099-DA This is a form intended to calculate taxable gains or losses when an intermediary digital asset changes hands. This form will likely have an array of individual token codes that authorities can enter, including a space for a wallet address and where to find the associated transaction on the blockchain.
“Brokers must report any income they receive from the disposition of (and, in some cases, the basis for) the disposition of digital assets to you and the IRS on Form 1099-DA,” the instructions included with the form state. The form has a date of 2025. “We may need to recognize gains from these dispositions of digital assets.”
This announcement is preliminary and subject to change depending on the final outcome of tax regulations. was proposed last year. Establishing U.S. tax practices for cryptocurrencies is one of the necessary steps to remove uncertainty and confusion for investors, while crypto businesses will need to comply with the IRS's new system for digital assets Being sensitive about how to identify brokers (which may include wallet providers). , a decentralized platform and payment processor.
This version of the form asks filers to check a box describing their broker type (kiosk operator, digital asset payment processor, hosted wallet provider, non-hosted wallet provider, or “other”) .
“Some of those boxes are related to economic activities, such as kiosks and payment processors, while others are customer relationship-based, such as hosted or non-hosted wallet providers,” said TaxBit, responsible for government solutions. CEO Miles Fuller told CoinDesk. “How does the IRS expect to use this information, and how do certain brokers, such as centralized exchanges and decentralized protocols, that are subject to current regulations fit into these boxes? I'm interested.”
Fuller also predicts that brokers will “use some kind of digital asset registry to identify which virtual currencies are being sold on a form,” and that the Treasury Department's Internal Revenue Service will also He said he was interested. “Currently there is no formal registry, so it will be interesting to see how it develops.”
Jessalyn Dean, vice president of tax information reporting at Ledgible, pointed out the reference to so-called wash sales and that the form specifies transactions that are only recorded internally by crypto companies.she fought in her form analysis We believe that at least one of the boxes regarding non-deductible losses requires further guidance on how that works.
“As expected, it looks and feels similar to the traditional Form 1099-B for reporting sales of financial products,” Dean said, adding that the IRS has “packed many lines and boxes into this form.” It pointed out.
The IRS is seeking public comment on the draft form. It remains unclear when the tax agency will create a final rule, but indications are that the 2025 form will be completed sometime this year.
Updated (April 19, 2024, 20:32 UTC): Added comment from Miles Fuller of TaxBit.
