The IRS's draft 1099-DA form mandates brokers to provide detailed reports on 'digital asset transactions,' including wallet addresses and transaction hashes.
The U.S. Internal Revenue Service (IRS) has released a preview of a potential future tax form, the 1099-DA, intended for reporting transactions of brokered digital assets, such as Bitcoin.
According to the draft instructions, brokers will be required to report digital asset dispositions to both the taxpayer and the IRS. The draft form, marked with a 2025 date, includes spaces for wallet addresses and transaction hashes.
The IRS has outlined different broker types that may need to report, listing categories such as kiosk operators, digital asset payment processors, hosted wallet providers, unhosted wallet providers, among others. Jessalyn Dean, vice president of tax information reporting at Ledgible, compared the layout to the traditional 1099-B form used for reporting sales of financial products. However, Dean highlighted the form's complexity, noting the inclusion of many lines and boxes. She also mentioned that further guidance would be needed on certain aspects like non-deductible losses associated with wash sales.
Miles Fuller, head of government solutions at TaxBit, expressed approval of the draft form on LinkedIn, particularly noting the inclusion of wallet addresses and transaction hashes. Despite some contention over these points during feedback, he was curious to see if they would remain in the final regulations.
The IRS is currently accepting public comments on the draft form. While it is uncertain when the final rule will be established, the date on the form suggests that the IRS is aiming to finalize the regulations sometime in 2023.
