Taxbit now supports Form 1099-DA for digital assets

Digital asset and tax accounting platform TaxBit announced comprehensive support for the 1099-DA form, facilitating compliance with the newly released US Treasury and IRS Digital Asset Broker Regulations., which is set to go into effect for the 2025 tax year.

“We were founded to solve the complexity of crypto taxes. Our platform combines the expertise of industry-leading tax professionals with cutting-edge technology. Having filed over 100 million forms, we are adept at managing the intricate demands of digital asset taxation,” says Lindsey Argalas, CEO of Taxbit. “As global regulatory frameworks evolve, including forthcoming regimes in Europe like DAC8, Taxbit empowers brokers to adapt to these changes with confidence quickly, in markets around the world.”

The regulations, which were approved in June (see previous story) apply to brokers that take possession of the digital assets being sold by their customers, including operators of custodial digital asset trading platforms, certain digital asset hosted wallet providers, digital asset kiosks, and certain processors of digital asset payments. Under the new regulations:

• Brokers must report gross proceeds for transactions effected on or after Jan. 1, 2025.
• Brokers must report basis on certain transactions effected on or after Jan. 1, 2026.
• Real estate professionals that are treated as brokers must report the fair market value of digital assets paid by buyers and received by sellers in real estate transactions with closing dates on or after Jan. 1, 2026.
• For certain sales of stablecoins and nonfungible tokens, brokers can choose to report the transactions on an aggregate basis to the extent the sales exceed respective de minimis thresholds.
• A separate de minimis threshold also applies for PDAP sales.

The IRS earlier this month posted an early draft of the updated Form 1099-DA (see previous story). There were significant changes from the prior draft, which had been previewed in July, including removal of “the ambiguous free form box ‘Explanation if no recipient TIN’ ” and the box to indicate “Broker type.” Other changes include:

• Boxes 11a and 11b are repurposed for aggregate reporting of qualifying stablecoins and specified nonfungible tokens, as expected from the final regulations. 
• Box 11c is repurposed for the broker to indicate the amount of gross proceeds related to primary sales of NFTs, as expected from the final regulations. “This is so that the IRS and the taxpayer have a better sense of gross proceeds that are ordinary income from a trade or business rather than sales of capital assets,” Dean said.
• Certain boxes related to changes in the final regulations are removed, as expected, such as the time of acquisition, time of sale, digital asset address, and sale transaction ID.

Comments about the draft can be left on the forms and publications comments page on IRS.gov.  For more information on Taxbit’s 1099-DA support, visit https://taxbit.com/taxbit-dashboard/.