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, 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 how this works in June 2024.

#The two-part rollout

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

Here’s 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 doesn’t fully show up until sales made in 2026, reported on forms you’ll get in early 2027.

#Covered vs. noncovered: why basis is often missing

The IRS splits your crypto into two buckets, and it matters which bucket a coin falls into when it’s 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, 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 hasn’t gone to the IRS, and it might be wrong (see the wallet rule below for why).

Covered assets are digital assets acquired starting in 2026, held at a broker that’s tracking basis going forward. For these, the broker’s reported basis does go to the IRS, and 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, even when the form doesn’t 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. Sell some Bitcoin from Coinbase, and it didn’t matter whether the specific coins you were selling actually came from Coinbase or got transferred in from a hardware wallet years earlier. It was all one pot.

Rev. Proc. 2024-28 ended that. Starting January 1, 2025, cost basis has to be tracked separately, wallet by wallet and account by account. The coins in your Coinbase account and the coins in your Ledger hardware wallet are now two separate baskets for basis purposes, even if they’re the same asset.

The IRS gave a one-time grace period to make this switch cleanly: taxpayers who had basis sitting in the old “universal pool” method could allocate it out to specific wallets under a safe harbor, using any reasonable method, without penalty for getting the split slightly wrong. That safe harbor window closed January 1, 2025. If you made the allocation by then, you’re protected. If you didn’t, the default rules apply and reallocating after the fact is not straightforward.

#What happened to DeFi reporting

A companion rule, finalized alongside the broker regulations, 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, a rarely used process for undoing recently finalized regulations, to vote down the DeFi reporting rule. The repeal passed the House in March 2025 with bipartisan support, and the bill was signed into law in April 2025.

Practical effect: if 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, and no rule currently on the books requires it to start. That doesn’t change your own obligation to report the trade. It just means there’s 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 the most common question ETS gets during the first 1099-DA season. A few situations, and the right move for each:

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 don’t need the broker to “fix” anything first, because for noncovered assets, they aren’t 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, and the exchange’s system 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, and for 2025, the IRS gave brokers penalty relief for good-faith reporting mistakes, which means some forms will simply be late, wrong, or missing this first year.

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 doesn’t report staking rewards as ordinary income, doesn’t track transfers between your own wallets (which aren’t taxable events but still need to be documented so basis carries over correctly), and doesn’t sort out which of your transactions are capital gains versus ordinary income. It’s 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 same as before. What changes is that 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, not 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? Generally yes if it’s sold or exchanged through a covered broker, though certain routine, small-dollar stablecoin and specified payment transactions have separate, narrower reporting thresholds. 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 shouldn’t 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, and you’re on the hook for its basis regardless of when you eventually sell.

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If you have crypto sales landing on a 1099-DA this season and you’re not confident the basis is right, 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.