Form 1099-DA and Digital-Asset Reporting

Form 1099-DA changes what brokers report.

It does not change the underlying tax law.

Taxpayers can make two opposite mistakes:

“It wasn't reported, so it isn't taxable.”

or

“The broker reported it, so the broker's number must be my tax result.”

Neither is safe.

What is Form 1099-DA?

Form 1099-DA is the federal information return for certain broker-reported digital-asset transactions.

The regime phases in over time, creating distinctions among gross-proceeds reporting, basis reporting, covered assets, and noncovered assets.

2025 gross proceeds

For covered broker transactions beginning in 2025, the reporting regime requires gross-proceeds information before full basis reporting applies to all relevant covered transactions.

A taxpayer can therefore receive Form 1099-DA showing proceeds while the broker does not report basis.

That does not mean basis is zero.

2026 basis reporting

For digital assets acquired in qualifying broker-custody circumstances beginning in 2026, covered-security basis reporting becomes part of the regime.

But not every asset sitting on an exchange in 2026 automatically becomes covered.

Assets transferred into a broker can remain noncovered for the receiving broker's basis-reporting purposes.

Transferred-in assets

Suppose you bought BTC elsewhere with $25,000 basis, transferred it to a new broker in 2026, and later sold it.

The receiving broker may not have mandatory basis reporting for that transferred-in asset.

That does not convert $25,000 historical basis into zero.

The taxpayer remains responsible for substantiating basis.

Broker basis is not automatically controlling

If Form 1099-DA shows $42,000 basis but contemporaneous records support $48,000, reconcile the difference.

Possible causes include different lot identification, transferred assets, transaction costs, incomplete records, broker identification, Notice 2026-20 relief, or data errors.

The objective is the correct substantive tax result, with proper handling of the information-return discrepancy.

Notice 2026-20

For qualifying custodial transactions through December 31, 2026, Notice 2026-20 permits eligible taxpayers to make adequate identification in their own books and records under the Notice.

For federal income-tax purposes, qualifying identification can control even if broker reporting reflects a different identification.

Documentation is therefore essential.

Missing 1099-DA does not mean no tax

Taxable transactions can occur through self-custody, non-reporting counterparties, some DeFi arrangements, foreign platforms, or other transactions outside a broker's reporting scope.

The tax obligation comes from the transaction, not the form.

DeFi reporting relief

Notice 2024-57 provides reporting relief for certain decentralized or specialized transactions.

It is not a nonrecognition provision.

No current 1099-DA requirement does not mean no current tax.

Stablecoins and NFTs

Specialized reporting treatment can apply to qualifying stablecoin and specified NFT transactions.

Reporting categories do not determine substantive tax character.

A stablecoin does not become tax-exempt because reporting is simplified.

An NFT reporting category does not decide whether the NFT is a §408(m) collectible.

2025 versus 2026

2025: broker gross-proceeds reporting begins under the phased regime.

2026: basis reporting begins for qualifying covered digital assets under applicable custody/acquisition rules.

Noncovered assets remain outside mandatory broker basis reporting.

Records

Preserve acquisition dates, purchase prices, transaction costs, wallets, transfers, transaction hashes, specific-identification records, income inclusions creating basis, gift/inheritance records, broker statements, and Forms 1099-DA.

Reconciliation sequence

1. Confirm transactions are yours.
2. Match proceeds.
3. Determine covered/noncovered status.
4. Compare reported basis with your records.
5. Verify the disposed lot.
6. Check transferred-in assets.
7. Review transaction costs.
8. Identify Notice 2026-20 differences.
9. Reconcile errors.
10. Preserve support for differences.