The tax form called 1099-DA, which will come into force in the USA from 2025, aims to report digital asset transactions in a standard manner. For individual investors, this form stands out as a new step that will increase transparency in taxable transactions where Bitcoin and other cryptocurrencies are just like traditional financial assets.
1099-DA Opening Year and Key Goals
The 1099-DA form developed by the IRS is an important innovation for individuals and brokerage firms who buy and sell crypto assets. In this form, which will be implemented in 2025, the gross revenues (proceeds) obtained by investors selling crypto will be reported directly to the IRS by brokerage firms. However, in this reporting, the cost amount of the assets subject to sale, that is, the “cost basis” section, will be missing or left blank in most cases.
This is mainly because investors transfer their crypto assets between multiple platforms and brokers do not have a reliable cost history. It becomes difficult for brokerage firms to accurately determine past purchase prices, especially for assets held in their own wallets or moved to different exchanges.
Following the Records: Cost Determination is Up to the Investor
With the new regulation, investors will generally only see sales revenue information on the 1099-DA form they receive. As highlighted in the relevant IRS guidelines, the cost determination and calculation of actual gain are based on the investor’s own records. Transactions made through more than one wallet, exchange or DApp (decentralized application) sometimes cause these records to be messy.
While mobility and freedom are encouraged in the crypto sector, the new tax framework encourages investors to stay on one platform and keep their records more organized. While the IRS announced that it will make more comprehensive cost reporting mandatory starting from 2026, it wants investors to pay special attention to their current transactions during this transition period.
Ongoing Uncertainties and Pressure on Investors
Underreporting the cost basis in tax reporting may cause the investor to pay more tax than necessary. Because declaration of sales income alone may cause an amount much higher than the actual income to be shown as taxable. The IRS once again reminds the investor of his primary responsibility in the guides published on the subject.
If an investor sells crypto for $50,000 and the actual cost is $40,000, his gain is $10,000. If the $40,000 cost is not included on the form, the reported benefit may increase to $50,000.
In the IRS’s current system, a CP2000 alert can be automatically sent when a mismatch is detected between the tax return and 1099-DA amounts. Even for investors who have not yet received a letter or faced a systemic warning, the risk of paying extra tax due to incorrect declaration continues.
In the first year of 2025, temporary exemptions were defined for brokerage firms that immunize them from bona fide reporting errors, while it is anticipated that more stringent auditing and reporting standards will be implemented in the following years. There are still temporary exceptions for some types of transactions (such as staking, liquidity provision).
In addition to the USA, the European Union’s DAC8 rule set and the OECD’s Crypto Asset Reporting Framework also introduce similar standards on a global scale. While these developments clarify the place of crypto money in financial markets, they gradually strengthen the infrastructure for transparent tracking of transactions.
