Form 1099-DA Does Not Replace Your Crypto Records. What Taxpayers Must Still Report
Overview
The Internal Revenue Service has finalized new broker reporting rules for digital asset transactions using Form 1099 DA. Many taxpayers expect this form to replace the need for detailed cryptocurrency records. That assumption is incorrect. For the current filing season, taxpayers must still provide complete digital asset transaction information to their tax preparer, even if a Form 1099 DA is issued. The form reports proceeds only and does not determine taxable gain or loss.
Why Form 1099 DA Does Not Replace Your Records
Form 1099 DA is designed to report gross proceeds from certain digital asset transactions beginning with calendar year 2025 activity. Brokers are generally not required to report cost basis, acquisition dates, holding periods, or prior transaction history. As a result, the IRS receives proceeds data without the information necessary to compute tax accurately.
The IRS has explicitly stated that taxpayers remain responsible for calculating gain or loss using their own records, whether or not a Form 1099 DA is received. This mirrors the early years of securities reporting, when proceeds were reported long before cost basis reporting became standardized.
What You Still Must Provide to Your Tax Preparer
- Original cost basis for each digital asset sold or exchanged
- Acquisition dates to determine short term versus long term treatment
- Records of transfers between wallets, exchanges, and accounts
- Details of non custodial activity and self hosted wallets
- Transactions not reported by any broker, including staking, mining, airdrops, and peer to peer transfers
Decentralized platforms and many foreign exchanges are not required to issue Form 1099 DA. In those cases, taxpayer maintained records are the only support for proper reporting.
IRS Matching and Audit Risk
Because Form 1099 DA reports gross proceeds only, the IRS matching system will flag discrepancies when proceeds appear on an information return but no corresponding capital gain or loss is reported. Reporting only net gains without reconciling to proceeds increases audit risk. Accurate reconciliation between Forms 1099 DA and taxpayer records is essential.
How This Relates to the New Form Layout
For a detailed explanation of each reporting box on the new form, see my prior article Understanding IRS Form 1099 DA What Each Box Means for Crypto Investors . That article explains what brokers report. This article focuses on what they do not report and why your records still matter.
Final Takeaway
Form 1099 DA increases IRS visibility into digital asset activity, but it does not calculate your tax liability. Until cost basis reporting becomes comprehensive, your own transaction history remains the foundation of accurate crypto tax reporting.
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