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Form 1099-DA – Digital Asset Proceeds From Broker Transactions

Starting in 2025, the IRS introduced Form 1099-DA, Digital Asset Proceeds From Broker Transactions. The intent in introducing this form is to bring more transparency to digital asset tax reporting.

The IRS estimates that at least $50 billion of the annual Tax Gap is attributed to unreported digital asset transactions where sales or exchanges of this asset class have occurred.

Transactions reported on Form 1099-DA

Form 1099-DA will report digital asset transactions, such as the sale, exchange, or disposal of the following asset types:

  • Cryptocurrency
  • Non-Fungible Tokens or NFTs
  • Stablecoins

Tax year 2025 is a transition year, and the only information on Form 1099-DA involving the transactions that will be completed in 2025 is:

  • Information to identify the asset
  • The gross proceeds
  • The date the asset is sold

The basis of non-covered transactions (any digital asset acquired before 2025) is not required to be reported on Form 1099-DA. Thus, it is the taxpayer's responsibility to determine the basis of their digital assets acquired before 2025.

Basis reporting is mandatory after 2025 for covered transactions, i.e., any digital asset acquired on or after January 1, 2025. 

Transactions not reported on Form 1099-DA

Other types of digital transactions create taxable income but aren't reported on Form 1099-DA. These include rewards, awards, and payments for goods and services.

Reward

A reward typically refers to a digital asset received in exchange for performing an activity or service, often in a blockchain ecosystem. Examples are Staking rewards, Mining rewards, and Referral bonuses or cashback incentives in crypto platforms.

A reward triggers ordinary income that is reported either as other Income or, if part of the taxpayer's business, included in Gross Income on Schedule C.

Awards

An award usually refers to a digital asset given in recognition of an achievement or as part of a contest or promotion. Examples include:

  • Winning crypto in a competition or sweepstakes;
  • Receiving an NFT or token as part of a promotional campaign;
  • Being granted crypto by an organization for non-service-based recognition.

An award is also treated as ordinary income, but it may be subject to different reporting requirements depending on the nature of the award (NFTs and Tokens) and its fair market value at the time of receipt.

Payments for Goods and Services

Receiving digital assets such as Bitcoin, Ethereum, or NFTs as payment for goods or services is treated as ordinary income. The fair market value of the digital asset at the time of receipt must be reported as income. This applies whether you're a business owner, freelancer, or even when selling personal items. The transaction is taxable, and the income must be reported on the appropriate schedule: Schedule C for business or self-employment income, or Schedule 1 for Other Income for hobby income.

TaxSlayer Pro strives to make the information on this page timely and accurate but makes no promise or guarantee about the timeliness, accuracy, or completeness of the contents of this page. This is general information and is not intended to be tax advice. You are encouraged to also review the underlying federal resources and publications.

Additional Information:

The following IRS references will aid in understanding the tax treatment of virtual currency and help you prepare the tax return for a taxpayer who engages in virtual currency transactions.