Form 1099-DA for Digital Asset Regulations Finalized
The IRS released final regulations that will require brokers, including digital assets (i.e. cryptocurrency and NFTs or non-fungible tokens), trading platforms, payment processors, and certain hosted wallet providers to issue Form 1099-DA to investors for sales and exchanges of digital assets that take place on or after January 1, 2025. The form will include gross proceeds from sales of digital assets occurring after 2024. In 2027, the 1099-DAs will begin reporting on a tax basis to determine gains and losses.
IRS Audits
The IRS pledges that it will not increase audit rates on households and small businesses making less than $400,000 per year. However, the Agency will not use the taxpayer’s adjusted gross income, but the total positive income, which is income before deductions and losses on the tax return. Audit rates on 2018 returns will determine the audit rate.