Form 1099-DA: Digital Asset Proceeds From Broker Transactions

Form 1099-DA is generally used to report certain proceeds from digital asset transactions and provide information for federal tax reporting purposes.

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Introduction

Form 1099-DA, Digital Asset Proceeds From Broker Transactions, is generally used by applicable digital asset brokers to report certain transactions involving digital assets. The form provides information about transactions that may be relevant when determining federal tax reporting requirements.

A taxpayer who receives Form 1099-DA should review the information and keep the form with their tax records. The tax treatment of a digital asset transaction can depend on the type of asset, transaction, acquisition information, and the taxpayer’s individual circumstances.

What Is Form 1099-DA?

Form 1099-DA is an information return generally used to report certain digital asset transactions conducted through applicable brokers. It provides transaction information that may be used when determining proceeds and other amounts for federal tax purposes.

The form is generally prepared by the applicable broker rather than by the taxpayer. The recipient may use the information from Form 1099-DA together with their own digital asset records when preparing a federal income tax return.

Who Uses Form 1099-DA?

Form 1099-DA may be used by digital asset brokers and other applicable reporting organizations that are required to report qualifying digital asset transactions.

Individuals, businesses, and other taxpayers who conduct reportable digital asset transactions through a broker may receive Form 1099-DA. A taxpayer should review the form together with records of purchases, sales, exchanges, transfers, and other digital asset activity.

What Information Is Needed?

The information on Form 1099-DA generally includes the broker’s information, taxpayer identification information, transaction details, proceeds, and other applicable information.

Taxpayers should compare Form 1099-DA with their own digital asset records, transaction statements, purchase records, and other documentation. Complete records may be important when determining cost basis, gain or loss, and other tax reporting information.

How to Fill Out/Complete Form 1099-DA

Form 1099-DA is generally completed by the applicable broker rather than by the taxpayer. The broker uses its transaction records to report applicable digital asset transactions and related information.

Taxpayers who receive Form 1099-DA generally use the reported information along with their own records when determining how digital asset transactions should be reported on their federal income tax return.

Section 1

Enter the applicable broker and taxpayer identifying information. This generally identifies the reporting broker and the person or entity associated with the reported transactions.

Review names, addresses, taxpayer identification information, and account details carefully. Accurate information helps ensure that the reported transactions are associated with the correct taxpayer.

Section 2

Enter or review the applicable transaction proceeds. Proceeds generally represent amounts received from reportable digital asset transactions.

Compare the reported proceeds with transaction statements and personal records. The proceeds shown on Form 1099-DA may not by themselves represent the taxpayer’s taxable gain or loss.

Section 3

Review the applicable digital asset transaction information. This may include information identifying the asset, transaction, dates, or other details reported by the broker.

Compare the information with the taxpayer’s own transaction history. Digital asset records may contain transactions that require additional review when preparing a tax return.

Section 4

Review applicable cost basis information when provided. Cost basis generally relates to the amount used to determine gain or loss from a digital asset transaction.

Taxpayers should maintain their own records because the information available to a broker may not always contain every detail needed to determine the taxpayer’s complete basis.

Section 5

Complete or review any additional applicable information reported on Form 1099-DA. The information required may depend on the type of transaction and reporting circumstances.

Not every taxpayer or transaction will have information in every category. Review the applicable fields and supporting digital asset records before using the form for tax reporting.

Final Review

Review Form 1099-DA after completing or receiving all applicable information. Check the broker information, taxpayer information, transaction dates, proceeds, basis information when provided, and other reported details.

A final review can help identify differences between the form and the taxpayer’s own records. Taxpayers should retain Form 1099-DA and supporting digital asset transaction records with their tax documents.

Common Mistakes

Common mistakes involving Form 1099-DA may include reporting an incorrect transaction amount, overlooking transactions, assuming reported proceeds are the same as taxable income, or failing to maintain complete digital asset records.

Another common mistake is relying entirely on the information provided by a broker. Taxpayers may need their own records to determine acquisition information, basis, holding period, transfers, and other details relevant to federal tax reporting.

Related IRS Forms

Form 1099-DA may be associated with Form 1040 and other federal tax forms and schedules used to report digital asset transactions, gains, losses, income, and related tax items.

Other forms may apply depending on the type of digital asset activity and the taxpayer’s circumstances. The appropriate reporting can vary based on whether the taxpayer sold, exchanged, received, transferred, or otherwise disposed of digital assets.

Where to File or Submit

Form 1099-DA is generally prepared by the applicable digital asset broker and furnished to the taxpayer when required. The broker may also have separate information reporting responsibilities.

The recipient generally does not submit Form 1099-DA as a separate federal tax return. When applicable, the taxpayer uses the information from the form when preparing their federal income tax return and keeps the form with their tax records.

Current IRS Form & Instructions

Tax forms and instructions may change over time. Digital asset brokers and taxpayers should use the version of Form 1099-DA that applies to the applicable reporting period and tax year.

The information on this page is intentionally general so it can remain useful across multiple tax years. Before preparing or using Form 1099-DA, users should review the applicable version of the form and its instructions because digital asset reporting requirements, basis reporting rules, transaction reporting requirements, and other tax procedures may change.

Important Information / Disclaimer

This page is provided for general informational and educational purposes and offers a basic overview of Form 1099-DA. It is not intended to provide individualized tax, legal, accounting, investment, digital asset, or financial advice and should not be considered a substitute for professional guidance.

Federal tax laws, forms, digital asset reporting requirements, basis rules, transaction requirements, and filing procedures may change over time. Information that applies to one taxpayer, broker, digital asset, transaction, or tax year may not apply to another, so users should consider their individual circumstances and seek assistance from a qualified tax professional when appropriate.