IRS to Introduce Form 1099-DA for Crypto Reporting
The IRS will require tokenized stocks & bonds to be reported on Form 1099-DA starting in 2025, with a transition rule until 2026.
- Form 1099-DA will apply to tokenized stocks & bonds from 2025.
- Brokers can use Form 1099-B or 1099-DA until 2026.
- The Treasury aims to ease the transition for traditional brokers.
IRS Overhauls Crypto Tax Reporting
The Internal Revenue Service (IRS) is making a significant change in how tokenized stocks and bonds are reported. Starting in 2025, brokers will need to file Form 1099-DA instead of the traditional Form 1099-B for these digital assets. The new form is part of the IRS’s ongoing effort to adapt tax rules to the evolving crypto landscape.
Form 1099-DA will specifically cover digital assets and tokenized financial products, making it easier to track taxable events and enforce tax compliance. This targeted approach is designed to close reporting gaps and ensure fair taxation in the rapidly expanding world of tokenized securities.
Transition Rule Eases the Shift
Recognizing the challenges traditional brokers might face, the Treasury Department has introduced a transition period. From 2025 to the end of 2026, brokers can choose to report cash sales of tokenized stocks and bonds using either Form 1099-B or Form 1099-DA.
This flexible approach is meant to provide brokers with sufficient time to adjust their systems and reporting processes without facing immediate regulatory pressure. For investors, it’s essential to be aware of which form their broker uses, as it may affect how they report capital gains or losses on their tax returns.
What This Means for Crypto Investors
For those holding or trading tokenized stocks and bonds, understanding the implications of Form 1099-DA is crucial. This form will provide a clear record of transactions, helping investors accurately calculate their tax obligations.
Additionally, with enhanced tracking and transparency, the IRS will likely improve its ability to detect tax underreporting in the digital asset space. Staying informed and maintaining accurate records will be key to ensuring compliance.
As the transition unfolds, both brokers and investors should monitor further IRS guidance on implementing these new reporting requirements.
