Summary
The IRS has introduced Form 1099-DA to tighten oversight on crypto transactions, aiming to enhance transparency and compliance in the digital asset market. Brokers must report crypto sales and exchanges starting in 2025, with additional reporting requirements in 2026. The form also covers real estate transactions involving crypto payments and includes provisions for wash sales. Experts express privacy concerns over the impact of detailed transaction data collection on crypto platform users.
Key Points
1. Form 1099-DA introduced by the IRS aims to enhance transparency and ensure compliance within the digital asset market. It will be mandatory for brokers starting January 1, 2025, and will require reporting of crypto sales and exchanges, mirroring traditional securities reporting standards.
2. Starting January 1, 2026, brokers will also need to provide information about gains or losses and the basis of the sales. The IRS’s recent addition to Form 1040 asks taxpayers about their engagement in digital asset transactions during the tax year.
3. The scope of reporting extends to real estate transactions involving crypto payments, with title companies, closing attorneys, mortgage lenders, and real estate brokers required to report the disposition of digital assets used in real estate deals using Form 1099-S. The form also includes provisions for reporting wash sales, indicating potential future intentions to regulate digital assets like stocks and securities.