On Jun. 28, US IRS issued final rules on digital asset sales reporting.
US Treasury, IRS issued final regulations requiring broker reporting of gross proceeds on sales and exchanges of digital assets that are subject to tax under current law.
Reporting will be required on Form 1099-DA beginning in 2026 for all sales in 2025.
Issued fact sheet, additional guidance on transitional relief, Notice 2024-56, reporting and penalty relief for brokers with respect to certain transactions, Notice 2024-57.
Require custodial brokers to report sales, exchanges of digital assets, including crypto.
Cover operators of custodial digital asset trading platforms, digital asset hosted wallet providers, digital asset kiosks, certain processors of digital asset payments (PDAPs).
Real estate professionals must report fair market value of digital assets paid by buyers and received by sellers in transactions with closing dates on/after Jan. 1, 2026.
Provide for optional, aggregate reporting method for certain sales of stablecoins and non-fungible tokens (NFTs) applicable only after sales exceed de minimis thresholds.
The regulations also provide a separate de minimis threshold for PDAP transactions.
Basis reporting required by certain brokers, for transactions on or after Jan. 1, 2026.
The regulations also provide rules for taxpayers to determine their basis, gain, and loss from digital asset transactions, as well as provide backup withholding rules.
Decentralized Brokers
These final regulations do apply to brokers that do not take possession of the digital assets that are being sold or exchanged (decentralized or non-custodial brokers).
US Treasury, IRS intend to issue a different set of final regulations for these brokers.
Transitional Penal Relief
Notice 2024-56 provides relief from reporting penalties and backup withholding.
For any broker who does not timely and accurately file information returns and furnish payee statements for sales and exchanges of digital assets during calendar year 2025.
Provided that the broker makes good faith effort to comply with reporting obligations.
Also provides more limited relief from backup withholding for certain sales of digital assets in 2026 for brokers using IRS’s TIN-matching system in place of certified TINs.
As well as provides backup withholding relief for exchanges of digital assets in return for specified NFTs and real property and for certain sales effected by PDAPs.
Temporary Exceptions
Notice 2024-57 states that until US Treasury, IRS issue further guidance, brokers will not have to file returns or furnish payee statements on six types of transactions.
These include, wrapping and unwrapping transactions, liquidity provider transactions.
Staking transactions, transactions described by market participants as lending digital assets, or as short sales of digital assets, and notional principal contract transactions.
Effectiveness
Brokers must report gross proceeds for transactions effected on or after Jan. 1, 2025.
Aug. 2024 US IRS Draft Form 1099-DA
On Aug. 9, 2024, US IRS reported it posted an early draft of updated Form 1099-DA.
