Crypto Tax Forms Are Finally Here and They’re As Fun As They Sound

How does the IRS define a crypto broker?

The definition of the term “broker” includes individuals or entities that regularly provide services to carry out digital asset transfers. This definition ensures that only those truly “in a position to know” transaction details are subject to Form 1099-DA reporting requirements.

The IRS broker rules now cover not just big cheese centralized exchanges but also decentralized finance (DeFi). Yep, even that one token you swapped at 3 a.m. while Googling “what is impermanent loss?” might get noticed. 💀

T.D. 10021 (the IRS’s spicy new decree) introduced the term “digital asset middleman.” Sounds cryptic? Think Bond villain, but instead of diamonds, they’re hoarding crypto transaction records. 🤓

• Digital asset exchanges: Custodial and non-custodial platforms enabling your Bitcoin misadventures.
• Hosted wallet providers: The ones promising they’re “totally secure” until they aren’t. 🔒
• Digital asset kiosks: Bitcoin ATMs. Because why not buy crypto in between picking up snacks?
• Crypto payment processors: That one service that charged you in Dogecoin for your NFT socks. 🧦
• DeFi brokers: Front-end service providers—basically, the folks waving at you while you inevitably “ape in.” 🐵

Oh, and if you’re using unhosted wallets thinking “No one can find me now,” good try. Unless you’re also acting like a crypto Robin Hood, you’re mostly safe. Mostly. ¯\_(ツ)_/¯

How the IRS expands the definition of “broker” in digital asset transactions

The Infrastructure Investment and Jobs Act (Public Law 117-58), specifically Section 80603, broadened the definition of “broker” under Internal Revenue Code Section 6045 to include those facilitating digital asset transfers.

The IRS rules now include a historical timeline so fascinating, it could put you to sleep faster than a bedtime story: Custodial brokers, DeFi brokers, Uncle Sam’s endless craving for receipts—you name it. 🛌

Custodial brokers (June 2024 — Treasury Decision 10000)

Think of custodial brokers as crypto babysitters. They’re holding your private keys while you’re busy yelling, “To the moon!” 🤑

DeFi brokers (December 2024 — Treasury Decision 10021)

If DeFi were the Wild West, the IRS would be the sheriff—now aiming straight at your front-end service providers. 👮‍♂️ One push of the panic button on your favorite swap app, and bam—you’re a “DeFi participant.”

Efforts to repeal the IRS broker rule

You might not have expected a drama-filled crypto debate, but here we are: March 2025, with political bickering, Senate votes, House votes, and a sprinkle of Trump saying, “You’re fired… broker rules!” There’s bipartisan agreement here for once, mainly because nobody wants to report their crypto. Same. 😬

Did anyone else catch “national crypto stockpile” in Trump’s pro-crypto stance? Definitely not hoarding JPEGs of apes in a vault, right? Right?! 🐒

What is Form 1099-DA? The new crypto tax form for 2025

Form 1099-DA, titled “Digital Asset Proceeds from Broker Transactions,” is a new tax form introduced by the IRS to standardize the reporting of digital asset transactions, such as those involving cryptocurrencies. It was released on Dec. 5, 2024.

It’s like the annoying cousin of Form 1099-B, but instead of stocks, it tracks every dog-themed cryptocurrency you somehow thought would make you a millionaire. 🐕💸

Brokers must report everything—and I mean everything—including your name, address, TIN, transaction dates, the type of crypto, proceeds, and even a nine-digit code because… bureaucracy loves a good code. 🤷

Key dates:

• Gross proceeds reporting: Starts Jan. 1, 2025. Translation: Say goodbye to “crypto tax loopholes,” folks.
• Basis reporting: Kicks off in 2026. That’s right, you’ve got just over a year to find that Excel sheet… you didn’t make. 😅

Before this, crypto tax reporting was like a bad breakup—messy, confusing, and leaving you wondering why you ever got involved. Now? It’s all standardized. Thanks… I guess? 🤦‍♀️

How Form 1099-DA shifts crypto reporting

On Jan. 10, 2025, the IRS released the final version of Form 1099-DA, titled “Digital Asset Proceeds From Broker Transactions.” Brokers have been instructed to use this form to report specific digital asset transactions occurring from 2025 onward.

Transition rule for tokenized securities

Tokenized what? If your crypto looks like traditional stocks or bonds but lives on the blockchain, congrats—it’s now living rent-free on Form 1099-DA. 🎉

Customer-provided acquisition information

Don’t trust brokers to know your secret sauce? You’re now allowed to provide acquisition info for reports. Fancy checkbox included. 🕵️‍♀️

Number of decimal places

Brokers are now capturing digital asset data to 18 decimal places. Because apparently, 10 wasn’t complicated enough for our tax-induced headaches. 🤕

How IRS crypto broker rules affect taxpayers

The IRS rolled out new cryptocurrency tax reporting rules effective Jan. 1, 2025, targeting brokers and investors with stricter record-keeping and reporting requirements. These changes aim to boost tax compliance and ensure digital asset transactions are reported accurately, bringing crypto in line with traditional financial assets.

• Cost basis tracking per account: Forget the old “everything-in-one-wallet” trick. Now it’s all account-by-account. Good luck! 🤦‍♂️
• Specific identification required: The IRS now wants the details of every coin, making FIFO as scary as your 2018 buys. 😱
• Temporary safe harbor: You’ve got until Dec. 31, 2025, to pretend you’re organized. Better start now. 📝
• Penalties for noncompliance: Lose receipts or try to outsmart them? Let’s just say, don’t. Just… don’t. 🔨

This isn’t just for Americans. Crypto traders outside the U.S., you’re on the IRS’s radar too! Bon voyage? 🛳️