Form 1099-DA: What Accountants Need to Know for Crypto Tax Reporting

Starting with the 2025 tax year, the IRS requires crypto brokers to issue Form 1099-DA for digital asset transactions. That sounds simple until you actually try to reconcile one.

By now, most accountants handling crypto clients have seen their first batch of 1099-DAs land. A lot of them do not match the client's books. This guide walks through what the form covers, who issues it, how it differs from the 1099-B you already know, and what to do when the numbers on the form do not line up with what your client reported.

What is Form 1099-DA

Form 1099-DA, "Digital Asset Proceeds From Broker Transactions," is the IRS reporting form for crypto brokers and payment processors. It was finalized in June 2024 after years of drafts and delays. Centralized exchanges, custodial brokers, and certain payment processors issue it to customers and to the IRS. The goal is to close the reporting gap that existed when crypto ran through platforms with no 1099 obligation at all.

Before 1099-DA, your crypto client's tax records came from CSV exports, wallet history, and their own spreadsheets. The IRS had no independent line of sight. Now they do, which means reconciliation is no longer optional.

Who must issue a 1099-DA

The IRS defines a broker broadly. It covers:

• Centralized exchanges like Coinbase, Kraken, and Gemini
• Payment processors handling crypto transactions
• Digital asset kiosks and ATMs
• Hosted wallet providers that process customer sales
• Real estate closing agents where crypto was used

Decentralized platforms and self-custody wallets are NOT required to issue 1099-DA under the current rules. The DeFi broker rule was repealed in early 2025 after industry pushback. That creates a coverage gap, and the gap is your client's problem to document.

What the form reports

A 1099-DA shows:

• Gross proceeds from each digital asset sale
• Cost basis (phases in starting with 2026 covered acquisitions)
• Wash sale adjustments where applicable
• Date acquired and date sold
• Type of digital asset (BTC, ETH, USDC, and so on)
• Transaction hash for certain on-chain transfers

For 2025 filings, only gross proceeds are mandatory. Cost basis reporting phases in for 2026. This creates a specific problem: clients will get forms showing what they sold but not what they paid. The accountant has to fill that gap.

How 1099-DA differs from 1099-B

Form 1099-B covers traditional securities like stocks and bonds. The 1099-DA borrows the structure and adds crypto-specific fields:

Field	1099-B	1099-DA
Asset type	Equity security	Digital asset
Basis tracking	Required	Partial (phases in)
Wash sale	Applies	Does NOT apply (yet)
Transaction ID	Broker ID	Transaction hash
Reporting threshold	All sales	All sales

Wash sale rules do not currently apply to crypto under IRS guidance. Legislation has been proposed multiple times but none has passed. For now, a client selling BTC at a loss and buying it back the next day has a clean realized loss on their return.

Key dates for 2026 filing

• January 31, 2026: Brokers issue 1099-DA to customers for 2025 transactions
• February 28, 2026: Paper filing deadline to IRS
• March 31, 2026: Electronic filing deadline to IRS
• April 15, 2026: Individual tax filing deadline

Corporate fiscal years have their own schedules. For businesses with crypto on the balance sheet, the 1099-DA feeds into both annual reporting and ASC 350-60 fair value measurements. Our ASC 350-60 guide covers the fair value side.

The reconciliation problem

Here is where accountants hit trouble. A client's books might show:

• 12.3 ETH sold in Q2 for $29,400 proceeds
• Cost basis of $18,200 using HIFO
• Realized gain of $11,200

The 1099-DA from Coinbase might show:

• 12.3 ETH sold in Q2 for $29,380 proceeds
• No basis reported
• Gain or loss: blank

The $20 difference comes from fee treatment. Your client's accounting software might net fees against proceeds while the exchange reports gross. Multiply that pattern across hundreds of trades and the reconciliation eats hours.

Transfers cause a worse problem. If a client moved ETH from Coinbase to a self-custody wallet, then to Kraken, and sold it there, neither broker has the full picture. Coinbase sees an outbound transfer with no known destination. Kraken sees an inbound asset with no known origin. The 1099-DA from Kraken will flag the sale but not the basis.

What accountants should do now

1. Pull every 1099-DA the client received. Do not wait for tax season. Download them as they arrive in January and store them with the client's books.

2. Reconcile against the general ledger monthly, not annually. A client with 2,000 trades a year cannot be reconciled in April. A crypto subledger that matches exchange data to Xero or QuickBooks entries in real time makes this tractable. Our crypto reconciliation software guide covers the tooling options.

3. Track basis for transfers. When crypto moves between wallets, tag the outbound and inbound records with the original acquisition data. The receiving broker will not have it.

4. Document cost basis methodology. FIFO, HIFO, or specific identification. Pick one per wallet and stay consistent. See our HIFO vs FIFO guide for the tradeoffs.

5. Map 1099-DA fields to your ledger. Every 1099-DA line should have a corresponding journal entry. If it does not, something is missing.

How a subledger helps

A crypto subledger sits between the wallet and exchange data and your accounting software. It imports transactions, applies cost basis automatically, and posts journal entries to Xero or QuickBooks with full audit trail. When a 1099-DA arrives, you can match it to the subledger in minutes instead of rebuilding the trail from raw data.

For DeFi activity that does not appear on any 1099-DA (swaps on Uniswap, liquidity pool rewards, staking yield on Ethereum or Solana), the subledger handles the classification that brokers will not. See our pricing for how Breezing handles it across 40+ chains.

FAQ

Q: Do self-custody wallets issue 1099-DAs? No. Only custodial brokers, exchanges, and certain payment processors issue the form. Self-custody transactions are the taxpayer's responsibility to track and report.

Q: What if I did not receive a 1099-DA from an exchange I used? You still have to report the activity. Missing 1099-DAs do not reduce your tax obligation. Download your transaction history directly from the exchange and reconcile manually.

Q: How does 1099-DA affect DeFi transactions? DeFi platforms are not currently required to issue 1099-DAs. The DeFi broker rule was repealed in 2025. Your client must self-report DeFi trades, swaps, and yield.

Q: When does cost basis reporting start on 1099-DA? For covered acquisitions on or after January 1, 2026. Anything purchased before that date will show as non-covered, meaning the broker does not report basis.

Q: Can I rely on 1099-DA data and skip my own bookkeeping? No. The 1099-DA is one data source. It does not cover transfers between wallets, DeFi activity, staking rewards, or lost and stolen assets. Your books still need to be the source of truth.

Q: Does 1099-DA apply outside the US? No. 1099-DA is a US IRS form. Other jurisdictions have their own rules. EU firms should track MiCA reporting, and UK firms follow HMRC guidance.

Bottom line

The 1099-DA does not replace crypto bookkeeping, it puts it under IRS scrutiny. Accountants who were running lean on crypto reconciliation will feel the pressure first, because mismatches now get flagged automatically against the 1099-DA on file. Firms with a real subledger spend minutes per client instead of days. The difference shows up in April.