The IRS is set to introduce a new reporting form, Form 1099-DA, for tokenized stocks and bonds starting in 2025. This move aims to improve tax compliance and monitoring of tokenized securities, aligning reporting on these digital assets with current tax procedures. Brokers will have the option to use either Form 1099-B or 1099-DA during the transition period until 2026.
Form 1099-DA is designed specifically for reporting tokenized securities, such as stocks and bonds, in an effort to keep pace with the evolving digital economy. This new form will enhance the accuracy and efficiency of tax compliance boundaries, providing traders and investors with proper records of their transactions to help determine their taxes.
To assist brokers in adjusting to the new reporting system, the U.S. Treasury Department has implemented a transition period from 2025 to the end of 2026. During this time, brokers can use both Form 1099-B and Form 1099-DA for reporting on tokenized stocks and bonds. This transition rule gives traditional brokers the necessary time to adapt their systems and reporting processes before Form 1099-DA becomes the mandatory reporting standard in 2027.
The introduction of Form 1099-DA will provide a clear record of transactions, aiding in accurate tax reporting and enhancing the IRS’s ability to track and identify tax underreporting in the digital asset space. This move signifies a step forward in ensuring tax compliance and monitoring in the rapidly evolving landscape of tokenized securities.