IRS Form 1099-DA crypto reporting puts more transactions in view

IRS Form 1099-DA crypto reporting is now putting more digital-asset transaction data in front of the tax agency. For investors, the practical takeaway is to compare the new form with personal records, since it may report proceeds without supplying everything needed to calculate a tax result.

Final IRS rules require covered brokers to file Form 1099-DA and provide statements to customers for gross proceeds from certain digital-asset sales and exchanges occurring on or after Jan. 1, 2025. The agency’s rules cover custodial digital-asset exchanges, certain hosted-wallet providers, certain payment processors and digital-asset kiosks.

That third-party reporting gives the IRS greater visibility into crypto transactions. CNBC reported that Erin Collins, the IRS National Taxpayer Advocate, said the new visibility increases the likelihood that the agency identifies discrepancies.

What will Form 1099-DA show for crypto investors?

For the initial phase, the form reports gross proceeds, according to the IRS. It is not necessarily a complete calculation of taxable gain or loss.

Basis reporting, which generally means reporting the customer’s acquisition cost, begins later and is limited. Under the IRS rules, certain brokers must report basis for transactions on or after Jan. 1, 2026, only when the customer acquired the asset being sold or exchanged from that same broker on or after that date.

That distinction matters for people who bought crypto at one exchange, moved it to another platform or wallet, and later sold it elsewhere. The broker’s form may be useful, but it does not remove the investor’s responsibility to establish the tax details of a transaction.

Why your own crypto records still matter

The IRS treats virtual currency as property for federal income-tax purposes. Under the agency’s virtual-currency guidance, selling crypto for dollars can produce a capital gain or loss. The calculation is the difference between adjusted basis and the amount received, reported in U.S. dollars.

For crypto bought with real currency, basis generally includes the purchase price plus fees, commissions and other acquisition costs, the IRS says. An investor also needs the holding period: crypto held for one year or less before a sale or exchange produces a short-term gain or loss, while an asset held for more than a year produces a long-term result.

The IRS says its virtual-currency FAQs generally apply to transactions completed before Jan. 1, 2025. They explain the underlying property-tax framework, while the newer Form 1099-DA rules govern broker reporting for later transactions.

Recordkeeping can become harder as activity expands beyond a single purchase and sale. Collins told Congress that sales, exchanges, staking, mining, airdrops and transfers can involve difficult questions about basis, income recognition and the character of the transaction, CNBC reported.

A practical checklist before filing

• Keep records of acquisitions, transaction dates, costs and fees.
• Review Form 1099-DA against those records rather than treating it as a finished tax calculation.
• Identify the basis and holding period for each sale or exchange.
• Document activity across exchanges, hosted wallets and personal wallets, especially where assets moved between them.

Form 1099-DA recipient statements are generally due by Feb. 15 of the year after the calendar year covered, subject to the IRS’s weekend and holiday rule. The form makes proceeds reporting more standardized, but accurate reporting still depends on the investor’s transaction history.

This story draws on original reporting from CNBC.