Form 1099-DA is the IRS information return that digital asset brokers use to report your cryptocurrency sales, swaps, and other dispositions to you and to the IRS. Brokers began issuing it for transactions on or after January 1, 2025, which makes it the first tax document dedicated to digital assets. If you sold, exchanged, or spent crypto through a centralized exchange, a hosted wallet, a crypto payment processor, or a crypto ATM during the year, expect at least one to arrive in late January or mid-February of the following year.
When the Form Arrives and What It Covers
Brokers must send your copy by January 31 of the year after the transactions took place. The deadline shifts to February 15 when the form contains information in Box 8 or Box 10. For 2025 transactions reported in early 2026, the IRS has said it will not impose penalties on brokers who make a good-faith effort to file and furnish correctly and on time. That grace period reflects how new the form is, not any softening of your own reporting duty.
The rollout runs in two stages. For 2025 sales, brokers report gross proceeds only and are not required to report your cost basis. Starting with sales on or after January 1, 2026, brokers must also report basis for assets that qualify as “covered securities.” Until then, and for anything noncovered afterward, filling in basis is on you.
What Each Box on Form 1099-DA Means
Each 1099-DA describes one or more digital asset sales through a series of numbered boxes. The ones that drive your return are:
- Box 1a, Code for Digital Asset: a nine-character identifier from the Digital Token Identifier Foundation, or “999999999” if the asset isn’t registered.
- Box 1b, Name of Digital Asset: the full name matching the DTIF registration, such as Bitcoin or Ethereum.
- Box 1c, Number of Units: the quantity sold, shown to up to 18 decimal places.
- Box 1d, Date Acquired: the original purchase date. This can be blank if the broker doesn’t know when you bought the asset, if the units were acquired on multiple dates, or if the asset is noncovered with Box 9 checked.
- Box 1e, Date Sold: the disposition date.
- Box 1f, Proceeds: the gross amount you received, reduced by transaction fees, commissions, and transfer taxes. Losses from closing transactions on written options appear as negative numbers in parentheses.
- Box 1g, Cost or Other Basis: your adjusted basis. For noncovered securities, this may be blank; if any amount appears, including zero, it has been reported to the IRS.
Box 2 tells you whether basis was reported to the IRS and whether Box 6 treats the gain or loss as short-term, long-term, or ordinary. Box 1h reports accrued market discount for digital assets that also qualify as debt instruments. Box 1i reports wash sale loss disallowed for digital assets that also qualify as stock or securities, a narrow category discussed below.
Covered vs. Noncovered Digital Assets
Whether an asset is “covered” controls how much the broker reports and how much recordkeeping falls on you. An asset is covered only if all three of these are true: you acquired it after 2025, you bought it in a custodial account where the broker held it, and it stayed in that same account until the broker executed the sale.
Anything acquired before January 1, 2026, transferred into a broker’s custody from an outside wallet, or bought through a non-custodial platform is noncovered. For covered assets the broker must complete Boxes 1d, 1g, 2, and 6. For noncovered assets the broker checks Box 9 and is not required to report basis, though some do voluntarily. When basis is missing, your own records fill the gap.
Reporting Form 1099-DA on Your Tax Return
The numbers on your 1099-DA feed into Form 8949, Sales and Other Dispositions of Capital Assets. Each transaction takes its own row: asset description, date acquired, date sold, proceeds from Box 1f, and cost basis from Box 1g. Proceeds minus basis is your gain or loss.
Which part of Form 8949 you use turns on two things: whether basis was reported to the IRS (Box 2) and whether the holding period is short-term or long-term. Assets held more than one year produce long-term capital gains, taxed at lower rates than ordinary income. Assets held one year or less produce short-term gains taxed at your regular rate.
Totals from Form 8949 carry to Schedule D of Form 1040, where net capital gain or loss is computed. If your capital losses exceed your gains, you can deduct up to $3,000 against ordinary income per year, or $1,500 if married filing separately. Unused losses carry forward indefinitely. Schedule D’s totals then flow into the tax calculation on Form 1040.
The IRS runs automated matching that compares broker-reported figures against your return. A mismatch triggers a CP2000 notice proposing an adjustment. A CP2000 is a proposal, not a bill, but ignoring it leads to an automatic assessment. The simplest defense is to make sure every transaction on a 1099-DA appears on your Form 8949, adjusting basis or proceeds if you need to.
Choosing a Cost Basis Method
Two methods are permitted for identifying which units you sold and at what cost: FIFO (first-in, first-out) and specific identification. FIFO is the default. With no designation, the IRS treats your earliest-purchased units as the ones sold first, applied mechanically in chronological order.
Specific identification lets you choose which units to sell on each transaction and gives you more control over the gain or loss. It requires contemporaneous records created before or at the time of the sale identifying the units disposed of. A standing instruction directing lot selection in a defined order satisfies this. A spreadsheet built after the fact does not.
HIFO (highest-in, first-out) and LIFO (last-in, first-out) are not separate IRS-recognized methods. They are lot-selection strategies executed through valid specific identification, with the same documentation requirements.
Since January 1, 2025, both FIFO and specific identification must be applied on a wallet-by-wallet or account-by-account basis under Rev. Proc. 2024-28. Universal pooling of basis across wallets and exchanges is no longer allowed. Anyone holding digital assets across several platforms before that date was required to allocate unused basis to each wallet or account before the first 2025 sale, or the due date of the 2025 return, whichever came first.
If Your Form 1099-DA Is Wrong
Errors, especially missing or incorrect basis, are common while the form is new. Start with the broker that issued it and request a corrected 1099-DA. Fixing it at the source is cleanest because the corrected data also goes to the IRS.
If the broker won’t correct the form, still report every transaction it shows on your Form 8949. Enter the proceeds as reported, then use columns (f) and (g) of Form 8949 to adjust the basis or proceeds to your actual numbers. The IRS already has the broker’s copy, so an unexplained omission is the fastest route to a CP2000. Keep documentation, including purchase confirmations, blockchain records, and wallet histories, that supports what you reported.
The accuracy-related penalty under Section 6662 adds 20% to any underpayment caused by negligence or a substantial understatement. Reporting every 1099-DA transaction, even when you disagree with the broker’s figures, is the most reliable way to avoid it.
Transactions That Won’t Generate a Form
Not every crypto transaction produces a 1099-DA. The IRS created three de minimis exceptions that excuse brokers from reporting small-dollar activity:
- Payment processor sales: a broker processing digital asset payments for merchants doesn’t have to report a customer’s sales if total proceeds are $600 or less for the year. Once the customer crosses $600, all of that customer’s sales through the processor must be reported.
- Qualifying stablecoin sales: under the optional reporting method for stablecoins, brokers may skip reporting when aggregate gross proceeds after transaction costs don’t exceed $10,000 for the year.
- Specified NFT sales: under the optional reporting method for NFTs, brokers may skip reporting when aggregate gross proceeds after transaction costs don’t exceed $600 for the year.
These thresholds limit the broker’s reporting duty, not yours. Tax on any gain is still owed even if no 1099-DA is issued.
Decentralized, non-custodial platforms are not covered by the current rules. Separate regulations extending broker status to certain DeFi participants do not take effect until January 1, 2027. Trading exclusively through decentralized protocols means you likely won’t receive a 1099-DA for now, but the transactions are still yours to report.
Wash Sales and Backup Withholding
The wash sale rule under Section 1091 prevents claiming a loss on “stock or securities” if you buy substantially identical shares within 30 days before or after the sale. That statutory language is limited to stock or securities, and as of 2026 no finalized federal law extends wash sale treatment to digital assets that don’t also qualify as stock or securities. Form 1099-DA includes Box 1i for wash sale loss disallowed, but the IRS instructions confine it to digital assets that are also stock or securities for tax purposes, a narrow category. Proposals to extend the rule to crypto have been introduced in Congress but haven’t passed. If one does, it could apply retroactively to the tax year of enactment.
Brokers generally must withhold 24% of certain payments when a customer hasn’t provided a correct taxpayer identification number on Form W-9. For digital asset transactions, the IRS issued Notice 2025-33 extending transition relief from backup withholding liability and related penalties through the end of calendar year 2026. Your exchange is unlikely to withhold from crypto proceeds during 2026, but keeping a current W-9 on file avoids complications once the relief expires. The January 2026 revision of Form W-9 adds an exemption code for payees in digital asset transactions covered by that relief, which is likely the reason an exchange would ask you to update your W-9.