Crypto taxes and the new Form 1099-DA

Brokers now send the IRS a form for digital asset sales, and you get a copy. The first ones often show what you sold for and nothing about what you paid, which is the difference between a real gain and a tax bill on money you never made.

What changed for 2025

Form 1099-DA is new, and it arrives in two stages. Brokers began reporting digital asset sales for transactions occurring on or after January 1, 2025, which is why a form landed this year for the first time. Basis reporting comes a year later: brokers must report basis on certain transactions effected on or after January 1, 2026.

That gap of a year is the whole story of this article. For the first round of forms, the broker tells the IRS what you sold for and often nothing about what you paid.

What the form shows

The form reports the proceeds from sales the broker carried out for you, along with the asset and the date. Where basis is reported it appears in fields the instructions name plainly: the date the asset was acquired, its cost or other basis, whether that basis was reported to the IRS, and the resulting gain or loss.

Those fields can be blank, and a blank one is not an error. Basis reporting is mandatory only for covered transactions; outside that, a broker may report basis voluntarily or not at all, particularly for an asset that arrived from another wallet or another platform.

The phantom gain problem

Here is what goes wrong. If you copy the proceeds onto the return and leave the basis empty, the whole amount looks like profit. Someone who bought and sold at almost the same price can end up taxed as though the entire sale were gain.

The fix is your own records. Gain or loss is proceeds minus what the asset actually cost you, and you report the basis you can support on Form 8949 whether or not the broker knew it. Purchase confirmations, exchange statements and the transaction history you can export are what stand behind that number, so pull them before you file rather than afterwards.

Transfers between your own wallets

Moving a coin from one wallet or exchange to another that you also control is not a sale and not income. Nothing is disposed of and nothing is received.

It is also the single most common reason the basis is missing. The receiving platform saw the asset arrive but never saw you buy it, so it has no cost to report. Keep the transfer records with the purchase records, because together they are what reconnect a sale on one platform to a purchase on another.

Trading one coin for another is a sale

This is the event people miss most often. Exchanging one digital asset for another is a disposition, so gain or loss is measured at that moment, using the value of what you gave up. No cash was withdrawn, nothing left the exchange, and the tax consequence happened anyway.

The same is true of paying for goods or services with a digital asset, and of exchanging one for dollars or another currency. A year of active trading can therefore produce a long list of taxable events from what felt like moving money around inside one account.

Staking, rewards and airdrops

Digital assets you receive rather than buy are generally income when you receive them, valued at that point, and that value then becomes your basis for the eventual sale. Staking rewards and assets from an airdrop following a hard fork both sit in that category.

The question on Form 1040

The return carries a digital asset question near the top, and it is not optional. It asks whether at any time during the year you received a digital asset as a reward, an award or payment for property or services, or sold, exchanged or otherwise disposed of one.

Everyone filing answers it, including people who only bought and held. Buying with real money and holding is not a yes on its own, but the question still gets answered, and answering it honestly is cheaper than the alternative.

Losses

Losses are not wasted. A capital loss offsets capital gains first, and a limited amount of any remainder can come off ordinary income each year, with what is left carried forward to later years. A year of falling prices is worth reporting properly for that reason alone.

What to keep

Every acquisition date and cost, every transfer between your own wallets, every disposal including the coin-for-coin ones, and the annual statement each platform produces. Reconstructing basis years later, from an exchange that may no longer exist, is the expensive version of this task.