Form 1099-DA Explained: New Crypto Reporting to the IRS

#What Form 1099-DA actually is

Form 1099-DA is the IRS’s new information return for digital asset brokers. Think of it as the crypto version of Form 1099-B. That is the form your stock brokerage sends when you sell shares.

The form exists because of a rule passed in the 2021 infrastructure law. That law told crypto platforms they now count as “brokers” for tax purposes, the same way Charles Schwab or Fidelity is a broker. Brokers have to report your sales to the IRS. The IRS finalized the detailed rules for this in June 2024.

#The two-part rollout

The IRS phased this in over two years. The two halves report different information. That is the part that trips people up.

Here is the short version. The form you get in early 2026, for your 2025 sales, mostly tells the IRS how much money came in when you sold. It usually does not tell the IRS what you paid to buy the crypto in the first place. That second piece does not fully show up until sales made in 2026. Those are reported on forms you will get in early 2027.

#Covered vs. noncovered: why basis is often missing

The IRS splits your crypto into two buckets. It matters which bucket a coin falls into when it is sold:

Noncovered assets are digital assets you acquired before 2026. For these, a broker is not required to report your cost basis to the IRS. This is true even if it shows a basis figure on the substitute statement it sends you. Some platforms will show you a basis number anyway, as a courtesy. But it has not gone to the IRS, and it might be wrong. See the wallet rule below for why.

Covered assets are digital assets you buy in 2026 at a broker that holds them for you. They stay in that account until you sell. If you move a coin in from another wallet or exchange, it is noncovered, and you track its basis yourself. For covered assets, the broker’s reported basis does go to the IRS. It becomes the number the IRS expects to see match on your return.

Because almost every 2025 sale is a noncovered asset, most people’s first 1099-DA season will show proceeds with little or no basis. If you file your return using only the 1099-DA’s numbers, the IRS’s system may think you sold crypto for pure profit, with $0 cost. You still have to supply your own cost basis on Form 8949, using your own transaction records. This is true even when the form does not show one.

#The wallet-by-wallet basis rule

Before 2025, most people tracked crypto cost basis one way: as one big pool across every wallet and exchange they owned. Say you sell some Bitcoin from Coinbase. It did not matter whether those specific coins came from Coinbase. They could have been transferred in from a hardware wallet years earlier. It was all one pot.

The final tax rules ended that. Starting January 1, 2025, basis must be tracked wallet by wallet and account by account (Treas. Reg. 1.1012-1(j)). Rev. Proc. 2024-28 gave a safe harbor to help people make the switch. The coins in your Coinbase account and the coins in your Ledger hardware wallet are now two separate baskets for basis purposes. That is true even if they are the same asset.

The IRS gave a one-time safe harbor. You could assign your old basis to each wallet, but only if three things were true. The split was reasonable. You wrote it down in your records. You finished on time. Once made, the split cannot be changed. If you skipped a step, the safe harbor does not apply. The safe harbor let you assign your old basis to each wallet as of January 1, 2025. You had to finish the work before your first 2025 sale of that coin. Or by the due date of your 2025 return (with extensions), whichever came first. For most people that deadline has now passed. If you did not finish, the safe harbor does not protect you. If you made the allocation, you are protected. If you did not, the default rules apply, and reallocating after the fact is not straightforward.

#What happened to DeFi reporting

A separate rule was finalized in December 2024. It would have required decentralized, non-custodial platforms (front-end interfaces for protocols like Uniswap, for example) to also report transactions, starting in 2027. That rule proved short-lived.

In early 2025, Congress used the Congressional Review Act to vote down the DeFi reporting rule. That is a rarely used process for undoing recently finalized regulations. The repeal passed the House in March 2025 with bipartisan support. The bill was signed into law in April 2025.

Practical effect: say you trade on a decentralized exchange or protocol directly from your own wallet. That platform does not send you or the IRS a 1099-DA. No rule currently on the books requires it to start. That does not change your own obligation to report the trade. It just means there is no third-party form doing it for you, and no broker’s cost-basis records to lean on. You need your own transaction history for anything that happens on-chain, outside of a custodial exchange.

#What to do when your 1099-DA is wrong or incomplete

This is one of the most common questions in the first 1099-DA season. A few situations, and the right move for each (and a step-by-step version in what to check when your 1099-DA arrives):

The form shows proceeds but no basis (the normal case for 2025 sales). Pull your own transaction records for that asset: the date you bought it, what you paid, and any fees. Report that basis yourself on Form 8949. You do not need the broker to “fix” anything first. For noncovered assets, they are not required to report basis at all.

The form shows a basis number, but you think it’s wrong. This usually happens when crypto moved between wallets before you sold it. The exchange’s system then guessed at a basis, instead of tracing the real history. Compare it against your own records. If yours is more accurate (and documented), use yours on Form 8949 and keep your supporting records in case the IRS asks.

You never got a 1099-DA at all, but you know you sold crypto. You still owe tax on the sale. The obligation to report is yours regardless of whether a form shows up. For 2025 sales, the IRS said it will not fine brokers who make a real good faith effort to file correct forms on time. That does not change what you owe. Some forms may still come late or with mistakes, so check them against your own records.

You sold on a decentralized platform. No 1099-DA is coming. Pull your wallet’s on-chain transaction history yourself.

#How this connects to the rest of your crypto tax picture

The 1099-DA only covers sales and exchanges handled by a custodial broker. It does not report staking rewards as ordinary income. It does not track transfers between your own wallets, which are not taxable events but still need documenting so basis carries over correctly. And it does not sort out which of your transactions are capital gains versus ordinary income. It is one input into a much bigger bookkeeping picture, not the whole answer.

#Common questions

Do I need to do anything differently on my tax return because of Form 1099-DA? Not structurally. You still report crypto sales on Form 8949 and Schedule D. The 2025 Form 8949 has new boxes just for digital assets (G to L). If your 1099-DA shows proceeds but no basis, you use box H for short-term sales or box K for long-term sales. What changes: the IRS now has its own copy of your proceeds figures. So any gap between your return and the 1099-DA is more likely to get flagged.

Will I get more than one 1099-DA? Yes, if you sold crypto through more than one exchange or custodial platform. Each broker sends its own form covering only the sales it processed.

What if I only bought and held crypto in 2025 without selling? No 1099-DA applies to you for that activity. The form only reports sales, exchanges, and certain other dispositions. It does not report purchases or unrealized gains.

Does 1099-DA cover NFTs? Yes, NFTs are digital assets under these rules when sold through a covered broker or marketplace. The same gross-proceeds-first, basis-later timeline applies.

Is stablecoin activity reported on Form 1099-DA? Often yes. But a broker can skip some small amounts. For qualifying stablecoins the limit is $10,000 in sales for the year. For certain NFTs and payment processor sales it is $600. Even if no form comes, you still report the sale if it is taxable. This is a detail worth confirming with your preparer if stablecoins are a large share of your activity.

What if the IRS’s copy of my 1099-DA doesn’t match the one I received? This should not normally happen. But if you suspect it did, request a copy directly from the broker and compare line by line. Keep both copies with your tax records.

Should I wait for full basis reporting in 2027 before worrying about my cost basis records? No. Basis reporting for 2026 sales only covers assets acquired in 2026 or later, at a broker that tracks it going forward. Everything you already hold stays noncovered. You are on the hook for its basis, no matter when you eventually sell.

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Say your 2025 1099-DA does not match your records. Or you want to get your 2026 records right before next year’s forms. Either way, the Discovery call is the place to start. We reconcile 1099-DA proceeds against your actual transaction history, as part of every crypto bookkeeping engagement.