Crypto Investors Meet Their First 1099-DA — Without Cost Basis
Brokers issued the new digital asset form for the first time this season, reporting gross proceeds only. The number that determines what is actually owed does not arrive until next year.
For the first time, American taxpayers who sold cryptocurrency received a tax form about it.
Form 1099-DA, covering digital asset proceeds from broker transactions, applies to sales made on or after January 1, 2025 and reached investors in early 2026. Custodial brokers — the large exchanges and platforms — file a copy with the IRS.
The form reports gross proceeds. For this first year, it does not report what the asset cost.
Why that gap causes trouble
Tax is owed on gain, which is proceeds minus basis. A taxpayer who sold $80,000 of bitcoin that was purchased for $78,000 owes tax on $2,000. The IRS now has a document showing $80,000 and nothing showing $78,000.
The mismatch is not a problem if the taxpayer reports the transaction correctly and can substantiate basis. It is a substantial problem for anyone who moved assets between wallets and platforms over several years, which describes a large share of long-term holders.
Basis reporting begins with transactions made on or after January 1, 2026, meaning the first forms carrying that information arrive in early 2027.
The wallet problem
Traditional brokers can report basis because securities generally stay in one account. Digital assets move — between exchanges, into self-custody, through protocols and back.
When coins arrive at a platform by transfer, the receiving broker frequently has no reliable record of what they cost. Executives at major exchanges have said publicly that the resulting forms will confuse customers, and the industry has pressed for guidance on transfer reporting.
Practical advice
Three things matter this season. Keep every acquisition record, including transactions on platforms that no longer exist. Choose an accounting method — the default is first-in, first-out — and apply it consistently. And reconcile the form against your own records before filing, because an unexplained difference between a 1099-DA and a return is exactly the pattern automated matching is built to flag.
The broader point is that the era of digital assets being outside routine tax reporting has ended. The reporting infrastructure that has covered stocks for decades now covers this asset class too, with the usual first-year rough edges.
