Form 1099-DA Explained: What Your Broker Reports and How to Reconcile It

For years, crypto investors filled out their returns without anything resembling a brokerage statement. That era is over. Starting with sales in 2025, custodial crypto brokers report your transactions to the IRS on Form 1099-DA, Digital Asset Proceeds From Broker Transactions, and send you a copy.

Here is the truth about that form. It tells the IRS what you sold for. Until basis reporting phases in, it often does not tell the IRS what you paid. If you file a return that only echoes the proceeds, you can end up paying tax on money you never made. This guide explains what the form contains, what it leaves out, and how to reconcile it on your return.

Where the form comes from

The Infrastructure Investment and Jobs Act amended section 6045 of the Code to cover digital assets. The Treasury implemented it in final regulations, T.D. 10000, at Treas. Reg. 1.6045-1. Notice 2024-57 summarizes who those regulations reach: digital asset trading platforms, certain processors of digital asset payments, certain hosted wallet providers, and digital asset kiosks. These are custodial or payment businesses that stand between you and the transaction.

A separate set of rules that would have required reporting by certain decentralized platforms was disapproved by Congress in 2025 and removed. See the DeFi broker rule repeal. The custodial rules were not affected.

The two-stage phase-in

• Gross proceeds. Brokers report gross proceeds for sales effected on or after January 1, 2025. The regulation says a broker is not required to report proceeds for sales before that date.
• Basis and acquisition date. For sales on or after January 1, 2026, brokers must also report adjusted basis, the purchase date and whether the gain or loss is short-term or long-term, but only for covered securities. For most crypto, that means units the broker acquired for you in your account on or after January 1, 2026.

That second rule is narrow on purpose. Crypto you bought before 2026, and crypto you moved into an exchange from your own wallet, generally will not have basis reported. The covered vs. noncovered guide explains why.

What the form contains

For each reportable sale, the broker reports the gross proceeds, generally reduced by allocable digital asset transaction costs, along with the information required by the form and its instructions. For a sale of a digital asset that you previously transferred into the broker's account, Treas. Reg. 1.6045-1 requires the broker to report the date of the transfer in and the number of units transferred. That transfer-in date is not your acquisition date; it is a flag that the broker does not know your real history.

The regulation also allows brokers to consider customer-provided acquisition information in some cases, and the form indicates whether the broker did so.

Thresholds and optional aggregate reporting

• Payment processor sales. A broker that processes digital asset payments does not have to report a customer's processor sales for the year if gross proceeds, after transaction costs, are $600 or less.
• Stablecoins. Brokers may report designated sales of qualifying stablecoins in aggregate, and need not report them at all if a customer's aggregate gross proceeds from those sales for the year are $10,000 or less. See stablecoin tax treatment.
• NFTs. Brokers may report sales of specified nonfungible tokens in aggregate, and need not report if a customer's aggregate gross proceeds for the year are $600 or less.

None of those thresholds change your tax. They only change what the broker files. A $400 gain that never appears on a form is still a $400 gain.

What the form leaves out

Notice 2024-57 lists transactions brokers are not required to report while the Treasury studies them further, effective for transactions on or after January 1, 2025: wrapping and unwrapping, liquidity provider deposits and redemptions, staking transactions, crypto lending, short sales, and certain notional principal contract transactions. The notice says the list creates no inference about how those transactions are taxed.

Income also is not on Form 1099-DA. Staking rewards, airdrops and crypto received for work are ordinary income items with their own reporting. And self-custody activity is not reported by anyone. The IRS position is consistent: you report every taxable transaction whether or not you receive a form. The 2025 Form 1040 instructions make the same point about the digital asset question, which must be answered whether or not you received a Form 1099-DA.

Reconciling on Form 8949

The 2025 Instructions for Form 8949 added checkboxes for digital assets reported on Form 1099-DA:

• Part I, short-term: box G if basis was reported to the IRS, box H if basis was not reported or not shown, box I if you did not receive a Form 1099-DA.
• Part II, long-term: box J, box K and box L, with the same meanings.

The instructions tell you not to use boxes C or F for digital assets. If basis was reported and is wrong, use adjustment code B: enter the reported basis in column (e) and correct it in column (g). If basis was not reported, enter the correct basis in column (e). If transaction costs you paid are not reflected on the form, use code E and enter them as a negative number in column (g).

There is a shortcut for clean transactions. Exception 1 in the instructions lets you report directly on Schedule D, without Form 8949, when the Form 1099-DA shows basis reported to the IRS, no adjustments are needed, and the ordinary box is not checked.

When your records and the form disagree

They will disagree. The most common reasons are missing basis on noncovered units, a broker applying first in, first out when you made a valid specific identification, and fee treatment.

On lot selection, Notice 2026-20 is direct: during the relief period through December 31, 2026, units you properly identified on your own books are the units you sold for federal income tax purposes, even if the broker's report does not match. The notice expressly warns that the acquisition date and basis a broker reports may not match your records. Your job is to report correctly and make the difference visible on Form 8949, not to copy the broker's numbers. See specific identification and standing orders.

Give your broker a correct taxpayer identification number

Brokers that pay you proceeds have backup withholding obligations under section 3406 of the Code. Notice 2014-21, Q&A-14, said years ago that payments made in virtual currency are subject to backup withholding to the same extent as other payments in property, and the 2025 regulations even include a rule for units a broker withholds from a crypto-for-crypto exchange to satisfy backup withholding, in Treas. Reg. 1.1012-1(j)(3)(iii). The simplest way to avoid that problem is to make sure each platform has your correct name and taxpayer identification number on file.

What the IRS does with the form

The broker files Form 1099-DA with the IRS and gives you a copy. The IRS compares information returns with what taxpayers report. A Form 1099-DA showing $80,000 of proceeds, matched against a return that shows nothing, is the kind of gap that generates correspondence. A return that shows the $80,000 of proceeds, the correct basis, and an adjustment code explaining any difference is the kind that does not.

That is the real value of reconciling. You are not just computing tax. You are making your return line up, transaction by transaction, with what the IRS already has in its system.

A filing checklist

• Collect every Form 1099-DA, including corrected forms.
• Match each reported sale to your wallet-level lot records.
• Supply basis for every sale where it is missing, from your own records.
• Flag sales where your lot identification differs from the broker's and use code B.
• Add transactions no one reported: self-custody swaps, DeFi activity, payments made in crypto.
• Report ordinary income from rewards and airdrops separately. See where to report crypto on your return.

The form is a starting point. Your records are the finish line.

Frequently asked questions