Form 1099-DA explained in one line: it is the new IRS information return that U.S. crypto brokers use to report your digital asset sales – gross proceeds always, and cost basis only for “covered” coins bought in that same account on or after January 1, 2026. Coins you bought earlier, or transferred in from another exchange or your own wallet, will often show proceeds with a blank basis box. A blank basis is not a zero basis, and if you file as if it were, you can pay tax on money you never made.
Picture a founder at the kitchen table in February with a fresh PDF from their exchange. The proceeds column is full. The cost basis column is empty on half the lines. They bought most of that bitcoin in 2021, moved it to a hardware wallet, then sent it back to sell this year. The form is technically correct. It is also incomplete in exactly the way that costs people money.
That is the trap I want you to see before your 2026 forms land. The form is not your tax return. It is the IRS’s copy of what your broker saw – and your broker did not see everything.
Gordon Law Group, a crypto tax law firm, walks through what the form reports and where the cost basis gap shows up:
What Form 1099-DA Actually Is
The official name is Form 1099-DA, Digital Asset Proceeds From Broker Transactions. It exists because Congress expanded the broker reporting rules in the 2021 Infrastructure Investment and Jobs Act, and Treasury finalized the regulations in 2024. Think of it as the crypto cousin of the Form 1099-B you get from a stock brokerage.
According to the IRS page Understanding your Form 1099-DA, brokers use it to report proceeds from (and in some cases, basis for) digital asset dispositions to you and to the IRS. That includes selling coins for dollars, trading one coin for another, spending crypto on goods or services, and paying broker fees with crypto.
Two things the IRS says clearly that most people skip past:
- You must report all digital asset income, gains, and losses whether or not you receive a Form 1099-DA.
- You must calculate basis before you file. The form does not do that job for you.
For now the filing requirement generally applies to U.S. custodial brokers – the centralized exchanges and apps that hold coins for you. In April 2025, Congress used the Congressional Review Act to nullify the separate rule that would have pulled decentralized finance platforms into 1099-DA reporting. That does not make DeFi activity tax-free. It just means no form is coming for it.
The Timeline: What Already Happened and What Arrives in Early 2027
This is where a lot of articles get fuzzy, so here is the clean version from the IRS instructions:
Sales made in
What brokers must report
When you see the form
2025
Gross proceeds only. Basis reporting was not required, though some brokers showed it voluntarily.
Early 2026 (the first wave already went out)
2026 and later
Gross proceeds on all digital asset sales, plus mandatory basis for covered coins. Basis for noncovered coins is optional.
Early 2027 for the 2026 tax year, typically around mid-February
So if you sold crypto through a U.S. exchange in 2025, you probably already received this form. The 2026 version is the one with real basis reporting – and the one where the covered versus noncovered split starts to matter.
Covered vs Noncovered: Why Your Basis Box Might Be Blank
Under the 2026 Instructions for Form 1099-DA, a coin is a “covered security” only if it was acquired after 2025 in an account where the broker provided custody, and it stayed in that account until the broker sold it. Everything else is noncovered. The IRS list of noncovered digital assets includes:
- Coins acquired before 2026
- Coins transferred in to the broker from somewhere else
- Coins the broker did not hold in custody when you acquired them
For covered coins, the broker must report basis. For noncovered coins, the broker can leave basis blank, or report it voluntarily and check box 9 to flag the lot as noncovered. When coins were transferred in, the broker also reports how many units came in and the date of transfer in boxes 12a and 12b.
Here is the practical translation. If you bought bitcoin on Exchange A in March 2026 and sold it on Exchange A in October 2026, expect a basis number. If you bought it in 2022, or bought it on Exchange A and sold it on Exchange B, expect a blank – or a voluntary number you still need to check against your own records.
The Basis Mistake That Costs You: Blank Does Not Mean Zero
Your taxable gain is proceeds minus adjusted basis. If the form says you sold $40,000 of bitcoin and the basis box is empty, the IRS still sees the $40,000. If your return does not show what you paid, the math can quietly treat that whole $40,000 as gain.
Now run a simple teaching example. Say you paid $28,000 for those coins in 2021, including fees. Your real gain is $12,000. Report it with a blank basis and the paperwork can look like a $40,000 gain. That gap is not a rounding error. That is real money going to the Treasury that never belonged there – or, just as often, a mismatch notice months later that eats your weekend.
The fix is not clever. It is records:
Your bitcoin investment strategy can be brilliant and your tax file can still be a mess. I would rather see a founder with average returns and perfect records than great returns and a shoebox of screenshots.
How Self-Custody Transfers Are Handled
Moving coins between wallets or accounts you own is not a taxable sale. The IRS says so directly in its digital asset FAQs. The exception is any crypto you spend, or that is withheld, to pay the network fee for the transfer – that slice is a disposal.
The bigger issue is what the move does to your paperwork. The moment coins leave an exchange for your own wallet, that broker loses sight of them. When you later send them to an exchange to sell, the selling broker treats them as transferred-in and noncovered. Expect proceeds with a blank basis. You fill the gap from your own books.
Two rule changes make those books more important than they used to be:
- Wallet-by-wallet tracking. Starting January 1, 2025, the IRS expects basis to be tracked per wallet or account rather than across one big universal pool. Rev. Proc. 2024-28 offered a one-time safe harbor to allocate older unused basis to wallets as of that date. If you never looked at that, ask your CPA whether it applies to you.
- Default first-in, first-out. If you sell part of the coins in a wallet or account and do not make a valid specific identification in time, the default is to treat the earliest acquired units in that wallet or account as sold first. For custodial accounts after 2025, specific identification runs through the identifiers your broker allows.
None of this is a reason to avoid self-custody. It is a reason to keep a simple ledger: date, wallet, units, cost, fees, and where every coin went.
What I Would Do Before Your 2026 Forms Arrive
If you run a one-person business, fold this into your year-end tax moves before December 31, not in a panic next April. Here is the short list I would work through:
The form is the IRS’s view of your year. Your records are your defense. When the two disagree, the person with the receipts usually wins.
This article is education, not personal tax advice. Crypto rules are still moving, and your facts matter. Use it to ask better questions, then let a qualified CPA or tax attorney sign off on your return.
Form 1099-DA FAQs
What is Form 1099-DA?
Form 1099-DA, Digital Asset Proceeds From Broker Transactions, is the IRS information return U.S. crypto brokers use to report your digital asset sales. It always shows gross proceeds and, for covered coins, cost basis. You still calculate and report gain or loss yourself.
When will I get my 2026 Form 1099-DA?
Forms covering 2026 sales arrive in early 2027, typically around mid-February. Brokers already sent proceeds-only forms for 2025 sales in early 2026. The 2026 forms are the first to require cost basis for covered coins bought in that account.
Why is the cost basis blank on my Form 1099-DA?
Basis is required only for covered coins acquired in that broker account on or after January 1, 2026 and held there until sale. Older coins and coins transferred in from another exchange or your own wallet are noncovered, so brokers may leave basis blank.
Does a blank cost basis mean my basis is zero?
No. Blank means the broker did not report it, not that you paid nothing. Use your own purchase records to report the real basis on Form 8949. Filing with basis missing can overstate your gain and trigger IRS mismatch notices.
Is moving crypto to my own wallet taxable?
No. Transfers between wallets or accounts you own are not taxable, except crypto spent or withheld for network fees. But coins you later send back to an exchange are treated as noncovered, so keep records of the original cost and dates.
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