Your First Form 1099-DA: What the New Crypto Broker Report Tells the IRS, and What It Leaves to You

What actually changed, and when

For most of crypto's history, an exchange sent you nothing at tax time, or sent something improvised. That ended with a specific statutory change: the reporting requirement traces back to amendments to the Internal Revenue Code made by the Infrastructure Investment and Jobs Act in late 2021, and Treasury and the IRS then issued final regulations creating a purpose-built form. The IRS states the trigger date directly: reporting is required to be made on Form 1099-DA beginning with transactions on or after January 1, 2025.

Two details determine what your particular form looks like. The first is the phase-in. The IRS separates the two halves of the report and gives them different start dates: brokers must report gross proceeds for transactions effected on or after January 1, 2025, and must report basis on certain transactions effected on or after January 1, 2026. The practical consequence is that the first form most people ever see covers 2025 sales and shows what the sale brought in with no record of what the asset cost. The second detail is scope. The rules apply to brokers that take custody, which the IRS describes as those that take possession of the digital assets being sold by their customers, including operators of custodial digital asset trading platforms, certain digital asset hosted wallet providers, digital asset kiosks and certain processors of digital asset payments. Trades you made in a self-custody wallet against a decentralised protocol are not covered by that description, and the absence of a form for them changes nothing about whether they are reportable.

The number in the proceeds box is not your gain

This is the misreading that costs people money and sleep in equal measure. Gross proceeds is what a sale brought in, before subtracting what you paid for the asset. If you bought $9,000 of a token and sold it for $9,400, the proceeds figure is $9,400 — a number that looks alarming next to a modest $400 gain, and looks identical to the figure that would appear if you had bought at $12,000 and sold at a loss. Someone who moved the same funds in and out of positions repeatedly through the year can accumulate a proceeds total many times larger than the money they ever had, because every disposal adds its full sale value.

The IRS is unusually blunt about where the responsibility sits. Its guidance for recipients states that you must calculate basis before you file your tax return, and that whether or not you receive a Form 1099-DA, you must report all income, gains and losses from digital asset transactions on your federal income tax return. Read those two sentences together and the form's real role becomes clear: it is a cross-check the IRS now holds a copy of, not a computation. It tells the agency that a disposal happened and what it realised. Turning that into a gain or a loss is still your work, performed from your own records, and the arithmetic is unchanged from the year before the form existed. What changed is that the sale side is now visible to the IRS independently of your return, which makes an unreported disposal a mismatch rather than an omission.

Covered, noncovered, and why a blank basis box is normal

The instructions for the form draw a line that explains most of what confuses people. A covered security is described as a digital asset acquired after 2025 for cash, stored-value cards, different digital assets, or any property or services the disposition of which the broker is required to report. A noncovered security is anything that is not a covered security — which in practice means assets you acquired before 2026, and assets you transferred into the broker's custody from somewhere else. For noncovered units, basis reporting is not required, though a broker may report it voluntarily and indicate that it has done so.

The transfer case deserves particular attention because it will apply to a very large number of ordinary users. If you bought a token on one exchange in 2022, moved it to a hardware wallet, and sold it on a different exchange in 2026, the selling exchange has no idea what you paid. It never saw the purchase. It will report the sale and, entirely correctly, leave the cost side empty or flag it as unknown. That blank is not a mistake to be chased and not a signal that the IRS believes your basis was zero. It is the form describing the limits of what the broker can honestly know, and it is precisely the gap your own records are supposed to close. There is also transitional latitude on the broker side that explains some early inconsistency: for transactions occurring in calendar year 2025 and reported in 2026, the IRS said it will not impose penalties for failure to file and furnish Forms 1099-DA where the broker makes a good faith effort to do so correctly and on time. Early forms may therefore be imperfect, which is a reason to reconcile them against your own ledger rather than to treat them as authoritative.

The rule underneath the arithmetic moved too

Alongside the reporting regulations, the IRS issued Revenue Procedure 2024-28, and its effect is easy to miss because it changes bookkeeping rather than forms. Historically many people tracked crypto basis universally: one pooled ledger covering every wallet and exchange, from which a cost was drawn whenever anything was sold. That approach ended. Basis is now identified per wallet or account, and the revenue procedure provided a transitional mechanism allowing taxpayers to allocate unused basis to the units remaining in each wallet or account as of 1 January 2025.

The reason this matters for the form is that it determines whether your numbers can ever be reconciled with the broker's. A per-wallet world requires you to know which specific units left which specific place, and that information degrades fast if it is not captured as you go — transfer records get lost when an exchange closes an account, a wallet app is reinstalled, or a chain explorer stops indexing an old contract. The habit that solves it is unglamorous and takes minutes per month: export transaction history from every venue you use on a fixed schedule, keep the raw files rather than only a summary, and record transfers between your own wallets separately from disposals, because a transfer is not a taxable event but is exactly the movement that makes a later basis question unanswerable. Crypto tax software earns its cost here rather than in the filing itself — its real function is consolidating exports across venues into one per-wallet ledger you can defend, which is also the ledger you will hold a broker form up against.

When the form is wrong, and the scams that arrive with it

Errors will happen, especially in the first cycles, and the IRS gives an unambiguous procedure. If the information is incorrect, request a corrected form from the issuer, and keep a copy of the corrected Form 1099-DA with your records along with any correspondence with the issuer. If you received one in error, contact the issuer immediately. And on the question everybody asks first, the guidance is explicit: do not contact the IRS, because the IRS cannot correct your Form 1099-DA. The agency also advises against letting a dispute stall you — do not wait to file your taxes while a correction is pending. File accurately from your own records, keep the paper trail showing what you asked the issuer and when, and amend later if a corrected form changes the outcome.

Tax season also creates a reliable seasonal pattern worth naming in advance, because the defence is easier to apply before the message arrives than after. New forms mean new confusion, and confusion is the raw material of impersonation: messages claiming to be from a tax authority about an unreported disposal, from an exchange about a form you must click to unlock, or from a service offering to fix your basis if you connect a wallet or hand over an exchange API key. The structural test that disposes of nearly all of it is the direction of contact. Real tax correspondence and real broker forms arrive through channels you already have — the account you log into yourself, the postal address on file — and never require a wallet connection, a seed phrase, or a payment to release a document. No legitimate tax process anywhere involves typing a recovery phrase, and no legitimate correction requires you to move funds. If a message creates urgency about a tax deadline, the correct move is to close it and log in to the exchange or tax authority directly, by typing the address yourself.

Authority sources used

Outbound links are included for verification and entity authority, not decoration.

• Final regulations and related IRS guidance for reporting by brokers on sales and exchanges of digital assetsInternal Revenue Service
• Understanding your Form 1099-DAInternal Revenue Service
• Instructions for Form 1099-DA (2026)Internal Revenue Service
• Frequently asked questions about broker reportingInternal Revenue Service
• Digital assetsInternal Revenue Service

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