Many investors are going to be in for a nasty surprise coming this January. It’s a new IRS Form known as the 1099-DA.
This new form is for the sale of Digital Assets. Brokerage Houses, for the first time, are required to send them to Investors as well as the Government.
The IRS Code treats the sale of Crypto Assets, in most instances, the same as any other investment. You’re required to report the purchase price and date, the sales price and date, as well as any brokerage expenses to arrive at an appropriate Capital Gain for the transaction.
If the asset was held for more than a year, it’s taxed at the preferred Long Term Rate which is anywhere from 0% to 20% at the Federal Level. If the asset was held for less than a year, its considered a Short Term Gain and will be taxed at your regular income tax rate.
The problem this year will be the fact that the Brokerage Houses aren’t required to report the basis or the purchase price and date this year on the 1099-DA. This will probably create a headache for many investors.
Spend some time before tax season documenting the purchase price and date of all crypto assets that were sold in 2025. This isn’t the sort of thing that you’d want to guess at.
If you guess and you’re wrong, it could easily lead to a charge of Income Tax Evasion.
More importantly, the days of not being forced to report these sales are at an end. The IRS will automatically know what sales were processed this year on your behalf.
Please get your ducks in a row before April, while there’s still time.
Let me leave you with this…
The IRS is in the third year of a four-year, $4.1 billion modernization effort without much congressional oversight. The Service is taking a streamlined approach to automating and boosting the functionality of its systems.
Senior Officials from the IRS shared a draft modernization framework document with the Government Accountability Office that caught senior tax writers from the appropriations committee unaware. Eight were interviewed, and all said that the draft hadn’t been shared with them.
Even David Schweikert, (R-AZ.), The House Ways and Means Oversight Subcommittee Chair said that the IRS hadn’t shared it with him.
Let’s just hope that the Service isn’t spending $2.5B on Pina Coladas while on the beaches of Isla Mujeres. But if they are, I wouldn’t be surprised.
If you have questions, you know my number…
We’re all going to get through this. Let’s get through it together.
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Sincerely yours,
Chris Amundson
President
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