How it works
Form 1099-DA was created under the digital asset broker reporting regulations finalized in 2024. Custodial exchanges, hosted wallet providers, and crypto payment processors file it with the IRS and send you a copy, one form per broker. For 2025 transactions the form reports gross proceeds from sales and exchanges. Cost basis reporting phases in for assets acquired on or after January 1, 2026, so for several years many forms will show proceeds without the basis needed to compute gain.
Why it matters
The IRS matches every 1099-DA against your return by Social Security number. A form that is missing from your return, or a return that reports less than the forms show, generates a CP2501 or CP2000 notice automatically. Because early forms often lack basis, the proposed tax in those notices can treat your entire sale price as gain.
Example
You bought 2 ETH for 6,000 dollars in 2023 and sold them in 2025 for 7,000 dollars on an exchange. Your 1099-DA shows proceeds of 7,000 dollars and no basis. Reported correctly, your gain is 1,000 dollars. Matched against a return that does not reconcile the form, the IRS may propose tax on 7,000 dollars.
Related: cost basis, CP2000 notice, Form 8949. Read more: Form 1099-DA explained.
