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January 28, 2024

Understanding the proposed Digital Asset 1099 (1099-DA)

The official 1099-DA has yet to be published, however, among experts, it’s widely expected to be announced and published “soon”. Here is what we know so far will be required to be reported on the 1099-DA, per the current proposed regulations:

  • Customer’s name, address, and TIN;
  • Name or type of the digital asset sold and the number of units sold;
  • Sale date and time in UTC;
  • Gross proceeds of the sale;
  • Transaction ID or hash associated with the sale, if any;
  • Whether the consideration received was cash, different digital assets, other property, or services; 
  • Other items not listed that may apply where a digital asset sale is also a sale of securities;
  • Sometimes - where cost basis reporting is required:
    • Acquisition date and time of the asset in UTC;
    • Adjusted cost basis of the asset sold;
    • Long term or short term character of the sale;
  • Sometimes - where cost basis reporting is not required for transferred-in assets prior to 6045A guidance:
    • Date and time of transfer-in transaction;
    • Transaction ID or hash of transfer-in transaction; 
    • Digital asset address(es) from which the transferred-in digital asset was transferred;
    • Number of units transferred in by the customer as part of that transfer-in transaction.

The things of note are: Name or type of asset sold (and number), gross proceeds, transaction hash or ID, what was received in the sale, cost basis (as appropriate).This means that on the 1099-DA transaction details will be required. This data is available on the blockchain of course, but extracting it in bulk can be difficult. 

This is where Ledgible shines. Ledgible is the leading cost basis provider in the digital asset space. All the data that is available on the blockchain can be extracted, normalized, calculated and processed, then submitted to the reporting partner in charge of putting the basis data (and things like the transaction hash), PII, etc. onto the form and sending them out. Ledgible partners with the top tax reporting providers to ensure compatibility with existing systems and quality of reporting and compliance.

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