Learn · Guide
Form 1099-DA: what it is and why your records matter more than ever
Form 1099-DA is the information return that digital asset brokers now file with the IRS to report their customers' transactions. It is modeled on the Form 1099-B that stockbrokers have long used, and it represents the largest expansion of third-party reporting in the history of digital assets.
What Form 1099-DA is
Form 1099-DA is the information return digital asset brokers file with the IRS to report their customers’ sales and exchanges. You receive a copy. It reports what you sold and what you received for it, and — from 2026 — what you originally paid, when the broker knows.
It is modeled on the Form 1099-B that stockbrokers have long used, and it represents the largest expansion of third-party reporting in the history of digital assets. It is not a bill and not a tax calculation. It tells the IRS what your broker knows, which is not the same as what you owe.
The rollout happens in stages, and the staging is where taxpayers can get hurt.
This page covers what the form is and when each piece of it arrives. Two companion guides go deeper where most people actually get stuck: how to report it on your return and how cost basis works when the form does not supply it.
The timeline
The form implements the broker reporting rules of section 6045 of the Internal Revenue Code, which Congress extended to digital assets in the Infrastructure Investment and Jobs Act of 2021. Treasury and the IRS spelled out the details in final regulations published July 9, 2024 — T.D. 10000, 89 FR 56480 — and the form itself, formally Digital Asset Proceeds From Broker Transactions, is filed with the IRS with a copy furnished to you.
For transactions beginning in 2025, brokers report gross proceeds: the total amount you received when you sold or exchanged a digital asset. For transactions beginning in 2026, brokers also begin reporting cost basis, meaning what you originally paid.
| Transaction | What brokers report to the IRS |
|---|---|
| Sold in 2025 | Gross proceeds only — the total amount you received. |
| Sold in 2026 or later; acquired in that broker’s account on or after January 1, 2026 | Gross proceeds and cost basis. These are “covered” digital assets, and basis reporting is mandatory. |
| Sold in 2026 or later; acquired before 2026, or transferred into the broker from elsewhere | Gross proceeds; basis reporting is not required. These are “noncovered” assets, so the basis box may simply be blank. |
The definitions matter. Under the IRS instructions for Form 1099-DA, a digital asset is covered only if it was acquired in an account for which the broker provides custodial services and held there until the broker disposes of it. A unit transferred in from a private wallet or another platform is noncovered no matter when you bought it — the receiving broker never saw the purchase, so it has no basis to report.
The zero-basis problem
That one-year gap creates what practitioners call the zero-basis problem. When the IRS receives a form showing proceeds but no basis, its matching systems can treat the entire proceeds amount as gain.
A taxpayer who bought an asset for $9,000 and sold it for $10,000 has a $1,000 gain — but a proceeds-only report can make it look like a $10,000 gain. At a 24 percent rate that is $2,400 of proposed tax instead of $240.
And it does not expire when basis reporting begins. Transfers between platforms break the chain, exchanges shut down with their records, and each broker sees only its own account. Our guide to crypto cost basis covers how to calculate basis, how to reconstruct it when the history is gone, and how the specific-identification rules let you choose which units you sold.
If your Form 1099-DA is wrong
A Form 1099-DA is an information return. When it overstates your gain — most often because basis is missing — you report the correct figures on Form 8949 from your own records, ask the broker for a corrected form, and keep the documentation that supports the difference. What you must not do is copy an inflated form onto your return to avoid a mismatch; that converts a paperwork problem into real tax you did not owe.
Our guide to reporting Form 1099-DA on your return walks through the boxes, the Form 8949 adjustment, and what to do when a notice arrives. If reconciling turns up years that were never reported at all, see unreported crypto.
Current relief
The IRS has acknowledged the transition problem. Notice 2026-20 extends temporary relief on the adequate-identification rules — how taxpayers specifically identify which units of a digital asset were sold when their broker cannot yet accept those instructions — through December 31, 2026, giving the reporting system time to mature. That relief concerns the identification of units; it is not relief from filing obligations or penalties.
The mechanics are worth knowing. The relief, first granted in Notice 2025-7 and now running from January 1, 2025 through December 31, 2026, applies only to units held in a broker’s custody. During that period you may identify the specific units you are selling in your own books and records — by purchase date and time, by purchase price, or by a standing order you record before the sale — without communicating the identification to the broker. If you make no identification at all, the default rule treats your earliest-acquired units in that account as sold first. And under the notice, the units identified in your books control your tax result even when the broker’s form reports something different — which is precisely why the notice warns that broker-reported basis for 2026 transactions may not match your records.
And it does not change the fundamental point for taxpayers: the accuracy of your return still depends on your own basis records.
| Guidance | What it does |
|---|---|
| Notice 2024-56 | Broker-side transition relief: no information-reporting penalties for failures to file or furnish Forms 1099-DA for 2025 sales where the broker made good-faith efforts, plus limited backup-withholding relief. |
| Rev. Proc. 2024-28 | A safe harbor for allocating the basis of digital assets acquired before January 1, 2025 across wallets and accounts, as the rules moved to wallet-by-wallet and account-by-account tracking. |
| Notice 2025-7 | The original adequate-identification relief for broker-held units, covering 2025. |
| Notice 2026-20 | Extends that identification relief for an additional year, through December 31, 2026. |
Separately, proposed regulations under REG-105064-25 would govern how brokers furnish these forms electronically. Published March 6, 2026, the proposal would give brokers an alternative process for obtaining customer consent to electronic-only delivery of Form 1099-DA statements; the written comment period closed May 5, 2026, and the comments are public on the regulations.gov docket. Our founder, Andrew Gordon, submitted a formal comment letter on that proposal through his tax firm and testified at the IRS public hearing on July 8, 2026, because how millions of taxpayers receive these forms affects whether they can actually use them. Both documents are linked, with the public docket records, in our research library.
What you can do now
- Keep your own records of every acquisition: the date, the amount paid, and the fees.
- Export transaction histories from every exchange and wallet you use, because platforms shut down and data disappears.
- Reconcile broker-reported proceeds against your own records before you file.
- If you held digital assets before 2025, confirm how their remaining basis was allocated across your wallets and accounts under the Rev. Proc. 2024-28 safe harbor — wallet-by-wallet tracking has applied since January 1, 2025.
- If you choose specific lots when you sell, record the identification in your own books no later than the sale itself. That timing is what makes it count.
- If a form overstates your gain because basis is missing, your documentation is what corrects it.
The policy question underneath
How this reporting regime is staged — and what happens to the taxpayers caught in the proceeds-only gap — remains a live policy question. Our affiliate, Digital Asset Tax Advocacy, has taken positions on digital asset tax administration issues; you can read about its work on its section of this website. This page, like everything we publish, is educational only.
Common questions
What is Form 1099-DA?
Form 1099-DA, Digital Asset Proceeds From Broker Transactions, is the information return digital asset brokers file with the IRS to report their customers’ sales and exchanges. Brokers report gross proceeds for transactions beginning in 2025 and add cost basis for covered digital assets beginning in 2026, and they send you a copy of each form.
When do brokers report cost basis on Form 1099-DA?
Basis reporting begins with 2026 transactions. A broker must report basis only for covered digital assets — generally units acquired in that broker’s custodial account on or after January 1, 2026, and held there until sold. Units bought before 2026 or transferred in from elsewhere are noncovered, so their basis is often missing.
What should I do if my Form 1099-DA is wrong?
Do not copy an inflated form onto your return. Reconcile it against your own records, report your true cost basis on Form 8949, and keep the documentation that supports it. Ask the broker for a corrected form, and if an IRS notice later proposes tax on the overstated gain, respond within the window with your records.
What is the zero-basis problem on Form 1099-DA?
In the transition years, many forms show what you received for a sale but not what you paid. When basis is missing, IRS matching systems can treat the entire proceeds amount as gain — so a sale that actually produced a small gain, or even a loss, can look like a large taxable windfall.
Do I still need my own records if my broker reports basis?
Yes. Brokers report only the basis they know, transfers between platforms break the chain, and under Notice 2026-20 the lots you identify in your own books control your tax result even when they differ from the broker’s figures. Through at least 2026, your records — not the form — are the backbone of an accurate return.
Last updated
This page is educational and does not constitute tax or legal advice for your specific situation. For questions about your own filings, consult a qualified tax professional.
Stay informed
Get updates on new research, IRS guidance, and the rules we are tracking. One email when something matters, and nothing more.