Overview
Just one year ago at the end of 2024, we helped our clients prepare for the new IRS regulations that became effective on January 1, 2025. Those regulations required taxpayers to shift from a universal accounting method in determining cost basis for their digital assets to calculating cost basis wallet-by-wallet. Recognizing that most taxpayers who reported crypto on their tax returns had not previously adhered to the new per-wallet standard, the IRS allowed taxpayers to utilize a safe harbor under Revenue Procedure 2024-28 (Rev. Proc. 24-28) for allocating their existing cost basis across their various wallets and exchanges to ease the transition to the new standard.
Beginning in 2026, all of the steps taxpayers took to determine their cost basis heading into 2025 pays off as the next piece of the IRS’ new crypto tax reporting regime falls into place: Form 1099-DA.
What Information Will Be Reported on 1099-DA?
Throughout 2025, brokers (i.e. cryptocurrency exchanges) began collecting and tracking the information required to issue 1099-DA to their users. Most notably, 1099-DA will report the gross proceeds from sales of digital assets. In this case, gross proceeds means the total USD value of crypto sold for fiat or exchanged for another cryptocurrency.
What Information Will Not Be Reported on 1099-DA?
Most importantly, taxpayers’ cost basis will be absent on 1099-DA, but only for 1099-DAs that are issued in 2026 for tax year 2025. Although this may be frustrating for taxpayers who have been hoping for a tax document that would finally include both gross proceeds and cost basis, similar to Form 1099-B, taxpayers will have to wait one more year for that. The same way the IRS provided a safe harbor to taxpayers to adjust to the per-wallet standard for cost basis tracking, they have afforded similar relief for brokers to begin tracking this information for taxpayers. Beginning in 2027, brokers that issue 1099-DA will be required to report both cost basis and gross proceeds for transactions occurring in 2026.
How Do I Report My Cost Basis If My 1099-DA Only Reports Gross Proceeds?
Taxpayers are responsible for reporting cost basis on Form 8949. For taxpayers who are worried about a discrepancy between the cost basis the IRS receives on 1099-DA (i.e. $0) and the cost basis reported on their tax returns: the IRS is expecting this, and it actually already exists in other areas of tax reporting. In September of this year, the IRS released a fact sheet explaining that most 1099-DA’s will not contain cost basis information and that it must be calculated by taxpayers before their 2025 tax return can be filed. In a similar context, it is common for brokers to be missing cost basis information on Form 1099-B and for taxpayers to report the missing cost basis on Form 8949.
When Should Taxpayers Expect to Receive 1099-DA?
Brokers will need to provide a statement reflecting the information reported to the IRS on Form 1099-DA to taxpayers by February 17, 2026.
Will I Receive More Than One 1099-DA if I had Multiple Sales in 2025?
Most likely, yes. The instructions for 1099-DA require brokers to complete Form 1099-DA for each sale a broker has effected in 2025. While there is some potential room for brokers to aggregate certain sales on 1099-DA, it seems likely that taxpayers with multiple sales will receive multiple 1099-DA forms.
Will I Receive a 1099-DA if I Did Not Have Any Crypto Sales in 2025?
No, most likely not. Form 1099-DA is only required to be issued by brokers to taxpayers who have sales in 2025. If you only purchased crypto on an exchange using fiat in 2025, then you should not receive a 1099-DA. However, even if you did not sell any of your crypto for cash in 2025 and instead only traded one cryptocurrency for another, then you should receive a 1099-DA for each trade that occurred in 2025.
Will I Receive a 1099-DA From an NFT Marketplace Such as Opensea?
Most likely, yes. However, you may receive fewer 1099-DA forms due to the regulations permitting aggregate reporting for “Specified NFTs.” If you are an artist who mints their artwork as NFTs, you should expect to receive separate 1099-DA forms.
What Steps Should I Take Now to Prepare For Form 1099-DA?
Step 1: Identify All Wallets and Exchanges
- Create a complete list of all your wallets and exchanges, and be sure to include any new exchanges used in 2025.
- Identify all of your U.S. based exchanges from which you expect to receive Form 1099-DA, including any NFT marketplaces and cryptocurrency ATMs.
Step 2: Review Your Safe Harbor Statement Made as of January 1, 2025
- For those who made a safe harbor election under Rev. Proc. 24-28, it is important to identify how you elected to allocate your existing cost basis as of January 1, 2025. As discussed above, your 1099-DA will not have cost basis, so the steps that you took to allocate your the cost basis of crypto as of the beginning of 2025 is crucial in ensuring that you can properly report your crypto transactions on your 2025 tax return (and moving forward).
Step 3: Take Screenshots of Balances
- Take a snapshot or screenshot of each token balance in each wallet and exchange after completing all transactions for 2025 but before January 1, 2026. Be sure to include the total number of units of each type of digital asset. A helpful way to assist with cost basis calculations is to know what your balance of each crypto token is as of the end of each year. It is important to screenshot that information near the end of each year before you begin transacting across your various wallets and exchanges in 2026.
- Time stamp your screenshots using tools like OpenTimestamps.
Step 4: Maintain All Form 1099-DAs Received and Provide Them To Your Tax Preparer
- Although your 1099-DA forms that you receive for tax year 2025 will not have cost basis information, it is important that you maintain them for your records and provide them to your tax preparer.
- The IRS will still receive the amount of gross proceeds from your sales or exchanges of cryptocurrency that occurred in 2025. That means that the amount of gross proceeds that you report on your tax return should at a minimum be equal to the amount reported to the IRS. If you underreport your gross proceeds compared to what the IRS receives, the IRS has systems in place to automatically detect these mismatches, which can lead to an audit or other notice.
Final Thoughts
Form 1099-DA marks a major step in the IRS’s rollout of comprehensive digital asset reporting—but it doesn’t have to be overwhelming. With accurate records, proper cost-basis tracking, and a clear understanding of what brokers will and won’t report, you can stay ahead of the curve and avoid costly IRS issues.
If you’re unsure whether your current processes are sufficient—or if you want a professional team to review your safe harbor allocations, wallet structure, or cost-basis calculations—Gordon Law is here to help. Our crypto tax attorneys and CPAs were directly involved in shaping early interpretations of these regulations, and we’ve guided thousands of taxpayers through audits, compliance reviews, and year-end reporting.
The earlier you prepare, the smoother your 2025 filing will be.
If you’d like assistance, schedule a consultation today.
