Why we're supplying 1099-B instead of 1099-K Tax Forms
If you’re a U.S. resident or citizen, you’ll need to report any taxable gains or losses on your cryptocurrency transactions during the year.
We’re issuing 1099-B Forms because they are designed for capital assets such as stocks, bonds, and commodities, which, like cryptocurrencies, have a cost basis. Only the profit you make on cryptocurrency transactions is taxable and to calculate profit you need to report the cost basis (i.e., the price you paid) of acquiring the asset.
The 1099-K Form is not appropriate for reporting cryptocurrency transactions because it was designed to report income earned on third-party platforms such as eBay or Etsy where people provide goods or services in return for income. By using a 1099-K Form for crypto, you’re likely to pay more tax than you need to since the IRS may see your crypto holdings as income.
In October 2019, the IRS issued guidance that defined crypto as ‘legal’ property for tax purposes. So we’re issuing 1099-B Forms to minimize your tax bill following the clarification.