What does Form 1099-DA report, and how does a tax firm reconcile it for 2026?
By the W2gMatch team · Sources checked 09-11-2026 · General information, not tax advice.
Form 1099-DA is the broker report of a client's digital-asset sales: gross proceeds for 2025 transactions, and proceeds plus basis for covered assets from 2026. The IRS holds a copy. A firm reconciles each form to Form 8949 lot by lot, separates transfers from sales, tracks basis wallet by wallet, and documents where basis came from when the broker reported none.
What the form is
Form 1099-DA, Digital Asset Proceeds From Broker Transactions, is filed by a digital asset broker (under the digital-asset regulations: a custodial exchange, certain hosted-wallet providers, certain digital-asset payment processors and kiosk operators, among others) for a customer who sold, exchanged or otherwise disposed of digital assets through it. It reports gross proceeds and, in some cases, basis, to the customer and to the IRS. [1] A copy reaching the IRS means the same thing a W-2G does for a gambler: the income is expected on the return whether or not the form reached the client.
2025 forms and 2026 forms are different documents
For 2025 transactions, filed in early 2026, brokers were generally required to report gross proceeds and were not required to report cost basis. For 2026 transactions, filed in early 2027, brokers report both proceeds and basis for covered digital assets, broadly those acquired after 2025 and held in the broker's custody. [1] [3] The practical consequence for a firm: a 2025 form arrives with a proceeds figure and no basis, so the gain on Form 8949 has to be built from the client's own records; a 2026 form may carry basis for some lots and not others, and the two halves have to be told apart.
Where the reconciliation breaks
- Transfers are not sales. Moving coins between a client's own wallets or exchanges produces no gain, but a broker that receives the asset has no basis for it and may report proceeds with basis blank when it is later sold. The client's acquisition records fill the gap.
- Basis is tracked wallet by wallet. Since 2025 the unused-basis allocation and identification rules work per wallet or account rather than across every holding at once, under Revenue Procedure 2024-28. [2] A spreadsheet that pooled everything before 2025 has to be re-cut.
- Several brokers, one client. Each exchange reports its own dispositions. Duplicate lots, a sale on one platform of an asset bought on another, and stablecoin conversions all need the same one-to-one matching a gambling file needs between W-2Gs and statements.
- The gambling crossover. A deposit of crypto to a sportsbook or a prediction market is a disposition of the crypto at that moment, separate from whatever the wager later does. The prediction-market page covers the contract side.
What a defensible file looks like
Every 1099-DA on the transcript accounted for; every disposition on Form 8949 tied to a lot with a basis and a source for that basis; transfers listed and excluded with the wallet addresses that prove they were transfers; and a note on each broker whose form arrived without basis saying where the basis came from instead. The Wage and Income transcript is the same cheap cross-check it is for W-2Gs: the forms the IRS holds, by payer, before the client sends anything.
Related questions
My client never got a 1099-DA. Do they still report the sales?
Yes. The reporting obligation does not depend on receiving a form, and a foreign broker may not file one. The transactions go on Form 8949 and Schedule D from the client's own records either way.
Why is the cost basis missing on a 2025 Form 1099-DA?
Brokers were not required to report cost basis on Forms 1099-DA for 2025 transactions. Proceeds are reported; the basis has to come from the client's acquisition records, and the return should say so.
Does W2gMatch reconcile crypto?
W2gMatch reconciles gambling documentation: W-2Gs, 1099s, win/loss statements, wagering histories and the IRS transcript. This page is the firm's reference for the 1099-DA side of a client who also gambles; the crypto lot matching itself is done in the firm's own tools.
What IRS regulations govern cost basis reporting on Form 1099-DA for 2025?
For 2025 transactions, brokers were generally not required to report cost basis on Form 1099-DA, as per Treasury Regulations issued in August 2024. The primary requirement for 2025 was reporting gross proceeds. The comprehensive reporting of cost basis for "covered assets" on Form 1099-DA begins with transactions occurring in 2026, filed in early 2027. Taxpayers must rely on their own records for 2025 cost basis.
How do I calculate crypto cost basis for 2025 transactions when my 1099-DA is incomplete?
To calculate crypto cost basis for 2025 transactions, gather all acquisition records, including purchase dates, prices, and transaction fees from exchanges, wallets, and personal logs. Use these records to determine the original cost of each digital asset sold. The IRS requires taxpayers to maintain accurate records to substantiate their reported cost basis on Form 8949.
What is the difference between 'gross proceeds' and 'cost basis' on Form 1099-DA?
Gross proceeds on Form 1099-DA represent the total amount received from selling or exchanging digital assets before any deductions. Cost basis is the original price paid for the asset, plus any associated fees, which is used to calculate capital gain or loss. For 2025, Form 1099-DA generally reports only gross proceeds, requiring taxpayers to determine their own cost basis.
Are all digital assets considered 'covered assets' for 1099-DA reporting from 2026?
No, not all digital assets are considered "covered assets" for Form 1099-DA reporting from 2026. Covered assets generally include those acquired after 2025 and held in the broker's custody, similar to how securities are treated. Brokers are required to report cost basis only for these covered assets, meaning some 2026 forms may still have missing basis for older or non-custodial assets.
What is the IRS Notice 2026-20 relief for digital asset reporting?
IRS Notice 2026-20 allows taxpayers to use their own records to identify specific digital asset units sold, rather than relying solely on broker-provided information, for transactions in tax year 2026. This relief helps when brokers cannot yet accept specific identification instructions, but it expires on December 31, 2026, after which FIFO may apply by default if instructions are not provided to brokers.
The gambling half of the same client
W2gMatch reconciles a client's W-2Gs, 1099s, win/loss statements and IRS transcript into one audit-ready workpaper, the same one-to-one matching this page describes for digital assets.
Sources
- IRS, Understanding your Form 1099-DA, page last reviewed or updated 28-Jun-2026
- IRS Revenue Procedure 2024-28, allocation of unused basis of digital assets to wallets and accounts, released June 28, 2024
- The Tax Adviser, Navigating the Form 1099-DA reporting maze, March 2026 (secondary source)
Related
This page is general information about how U.S. federal and state tax rules apply to gambling, written to be checked against the sources it cites. It is not tax advice for your situation. A licensed CPA or enrolled agent should review your return before it is filed.