Form 1099-DA is a new tax form from the Internal Revenue Service (IRS). It is the first tax form created specifically for digital assets.
Starting with the 2025 tax year, brokers must use Form 1099-DA to report digital asset sales and exchanges. By early 2026, both taxpayers and the IRS will receive these forms.
The form is designed to standardize digital asset reporting, similar to how Form 1099-B works for stocks. This guide explains the requirements, deadlines, and what taxpayers and brokers need to prepare for.
Form 1099-DA is officially titled “Digital Asset Proceeds From Broker Transactions.”
Brokers must issue it for digital asset sales and exchanges beginning January 1, 2025.
First forms will be sent to taxpayers in early 2026 for the 2025 tax year.
It reports gross proceeds, cost basis, acquisition date, fair market value, and transaction details.
Corporations and tax-exempt entities will not receive Form 1099-DA.
Staking rewards, airdrops, and mining income are not included on this form.
Taxpayers remain responsible for keeping accurate records and filing a complete return
Form 1099-DA is officially titled “Digital Asset Proceeds From Broker Transactions.”
It is the first tax form created by the IRS that applies only to digital assets. Its purpose is simple: to give both taxpayers and the IRS a clear record of digital asset activity so that capital gains tax and income tax can be calculated correctly.
Form 1099-DA shows:
Gross proceeds from digital asset sales and exchanges
Cost basis and acquisition date of the assets sold
Fair market value at the time of the transaction
Transaction details such as date sold, wallet addresses, and transaction identifiers
This data helps determine whether you owe capital gains tax or if the proceeds qualify as ordinary income.
In the past, reporting crypto transactions meant gathering spreadsheets from crypto exchanges, wallets, and tax software. There was no standard IRS form. Now, with Form 1099-DA, brokers are required to send a uniform document that mirrors what stock traders have used for years with Form 1099-B.
This shift means:
Taxpayers will have a clearer picture of taxable income from digital asset transactions.
Tax authorities will receive matching reports directly from brokers, reducing underreporting and tax evasion.
Digital asset brokers now face new reporting requirements, making compliance a shared responsibility between the broker and the taxpayer.
The IRS has set a broad definition of “digital asset broker.” This means the responsibility to issue Form 1099-DA doesn’t stop with traditional crypto exchanges—it extends across the digital asset space.
Centralized crypto exchanges – platforms like Coinbase, Kraken, or Gemini that facilitate buying and selling.
Decentralized exchanges (DEXs) – if they operate in the U.S. or serve U.S. customers, they may fall under broker reporting requirements.
Hosted wallet providers – custodial services that hold customer wallets on their behalf.
Digital asset payment processors – companies that process crypto payments for goods and services.
Custodial brokers – intermediaries that safeguard and transfer digital assets for clients.
In short, any person or organization that facilitates digital asset transactions for customers may be required to file.
While the filing requirements are wide, the IRS makes some exclusions. Form 1099-DA will not be issued to:
Corporations
Government entities
Certain retirement accounts
This ensures the focus stays on individuals and taxable accounts where crypto transactions can create capital gains tax or taxable income obligations.
For crypto investors, this means you will start receiving standardized forms directly from brokers beginning with the 2025 tax year. For brokers, the responsibility is clear: maintain detailed records and ensure accurate reporting of gross proceeds, cost basis, and other transaction details.
The broad definition reduces gaps in tax reporting and makes it harder for taxable events to slip through unnoticed. For the IRS, it strengthens oversight. For taxpayers, it creates less guesswork—but also less room for error.
Form 1099-DA has a set rollout schedule that affects both brokers and taxpayers. The IRS expects everyone in the digital asset market to follow this timeline:
January 1, 2025 – All brokers must begin tracking digital asset transactions, including sales, exchanges, and transfers that create gross proceeds. This applies to both centralized and decentralized platforms.
Throughout 2025 – Brokers are required to keep detailed transaction data. This includes the acquisition date, cost basis, fair market value, and transaction details for each trade. These records will be used to calculate capital gains and taxable income.
January 31, 2026 – The first official Form 1099-DA will be sent to taxpayers. If you traded or sold digital assets in 2025, expect to receive this form in early 2026.
March 2026 – Brokers must file Form 1099-DA with the Internal Revenue Service (IRS). This step ensures the IRS has the same data that taxpayers report on their returns.
If you trade crypto or other digital assets, 2025 is the first year your activity will be tracked under the new rules. By early 2026, you’ll receive Form 1099-DA showing your digital asset proceeds. You’ll need to use it to calculate capital gains tax, ordinary income, and meet your tax reporting obligations.
Form 1099-DA is designed to capture digital asset transactions that brokers facilitate. The goal is to give the IRS clear records of taxable events and reduce underreporting.
Brokers will issue a 1099-DA for:
Sales of cryptocurrency for cash – For example, selling Bitcoin for U.S. dollars.
Exchanges of one cryptocurrency for another – Such as swapping Ethereum for Solana. Even though no cash is involved, this counts as a taxable event.
NFT sales over $600 in a year – If you sell non-fungible tokens and the total proceeds exceed $600, brokers must report it.
Broker-facilitated transfers of digital assets – Moving crypto through a brokered platform may also fall under reporting.
These events directly create capital gains or losses, which are what the IRS is most interested in tracking.
It’s important to understand what doesn’t appear on Form 1099-DA. You won’t see these listed, but they remain taxable and must be reported separately:
Staking rewards
DeFi or lending interest
Airdrops or hard forks
Mining rewards
These forms of income are treated differently from sales. They’re usually reported as ordinary income rather than capital gains. That means the IRS still expects you to include them in your tax return, even if they don’t show up on the form.
Many taxpayers assume that if it’s not on a 1099, it doesn’t need to be reported. That’s not true. Form 1099-DA covers only certain transactions. Everything else still falls on you to track and report accurately.
This split is where crypto tax software or working with a crypto tax specialist can help. By combining your 1099-DA data with your income from staking, mining, and airdrops, you’ll have a complete picture of your taxable activity.
Starting with the 2025 tax year, digital asset brokers have new obligations under the IRS rules. These requirements are meant to make digital asset reporting as clear and consistent as stock or bond reporting.
Brokers must provide detailed transaction information on Form 1099-DA, even if the amounts seem small. Each form must show:
Digital asset sales and exchanges – All transactions are reported, no matter the value. There is no “minimum threshold.”
Cost basis reporting – If known, brokers must report how much the taxpayer originally paid for the digital assets. This helps calculate capital gains and losses.
Acquisition date and sale date – Dates are critical to determine if the gain is short-term or long-term.
Fair market value (FMV) – Reported in U.S. dollars at the time of the transaction, even if the trade was crypto-to-crypto.
Taxpayer Identification Number (TIN) – The broker must match the digital asset transaction to the taxpayer by name and TIN.
Each of these reporting elements feeds into accurate tax compliance:
Cost basis + sale price = gain or loss
Dates = short-term or long-term tax rate
FMV = ensures values are tied to U.S. dollar amounts
TIN = matches the transaction to the right taxpayer
Without this level of detail, the IRS can’t verify digital asset reporting. That’s why the rules now require brokers to send the same form to both taxpayers and the IRS.
If a broker fails to meet these third-party reporting requirements, the IRS may impose fines. This creates strong pressure on brokers to comply with the rules and deliver accurate forms on time. For taxpayers, it means the IRS will already have a record of your digital asset transactions.
For taxpayers, Form 1099-DA changes how digital asset transactions are reported and reviewed. On one hand, it makes things easier by creating a single, standardized form. On the other, it raises the bar for accuracy and recordkeeping.
Form 1099-DA gives taxpayers more clarity than before:
Standardized reporting – The form is designed to work like the stock reporting system with covered securities, which many investors already know.
Easier tax calculations – With cost basis, acquisition dates, and gross proceeds included, you’ll have the numbers you need to calculate capital gains and losses.
Better software integration – Since the format matches IRS standards, most crypto tax software will be able to process these forms more efficiently.
But the form doesn’t solve everything. Taxpayers still have key responsibilities:
Incomplete cost basis – Brokers may not always know your original purchase price, especially if assets were moved between wallets. That means you’ll need your own records.
Detailed recordkeeping – You’ll still need to track every crypto transaction, including dates, amounts, and fair market value, to confirm what the form shows.
Higher risk of IRS scrutiny – If your return doesn’t match what the IRS receives from brokers, it could trigger questions or an audit.
Form 1099-DA will make crypto taxes look more like traditional investing taxes, but it won’t replace personal responsibility. You’ll still need:
Accurate personal records to back up broker data
Knowledge of what’s missing from the form (like staking rewards)
A plan for handling any mismatches before filing
In short, the form gives you a clearer starting point. But compliance still depends on how well you maintain your records and report your digital asset transactions.
Form 1099-DA is designed to give both taxpayers and the IRS a clear record of digital asset transactions. It works much like Form 1099-B for stocks, but it’s tailored to the unique nature of crypto.
The form doesn’t just list totals. It provides detailed transaction data so the IRS can check reported gains against broker submissions. That’s why understanding each section matters.
Form 1099-DA includes several key fields:
Taxpayer name and TIN – Your legal name and taxpayer identification number (TIN). This links the report directly to your tax return.
Broker details – The name, address, and contact information of the digital asset broker or exchange that issued the form.
Gross proceeds – The total amount you received from selling or exchanging digital assets, reported in U.S. dollars.
Cost basis (if known) – The original purchase price of the digital asset, adjusted for fees. If the broker doesn’t know your cost basis (common when assets are transferred from another platform), this line may be blank.
Acquisition and sale dates – The dates you acquired and sold the digital asset, which determine if gains are short-term or long-term.
Transaction fees – Any fees paid to facilitate the transaction, which may reduce your taxable gain.
Wallet or account identifiers – Unique numbers or wallet IDs linked to your transaction, ensuring accuracy when multiple wallets are used.
Fair market value in U.S. dollars – The value of the digital asset at the time of the transaction, converted into dollars for tax purposes.
Each line connects directly to how you calculate crypto taxes:
Gross proceeds show the total sale amount.
Cost basis determines whether you actually owe capital gains tax — and how much.
Dates decide if you qualify for long-term capital gains rates or if it’s taxed as short-term.
Transaction fees can lower your taxable income by reducing your gains.
Without accurate cost basis and acquisition dates, taxpayers risk overstating their gains — and paying more tax than they actually owe.
The Internal Revenue Service (IRS) will use this information to:
Cross-check what you report on your tax return.
Identify unreported crypto transactions.
Detect patterns of tax evasion in the digital asset space.
In other words, the IRS will see the same numbers you do. If there’s a mismatch, they’ll know.
Cost basis is the starting point for figuring out whether you made money or lost money on a digital asset. It’s the amount you originally paid for the asset, plus any fees, when you bought it. When you sell or exchange that asset, your cost basis is compared against the gross proceeds to calculate your capital gain or loss.
If the IRS doesn’t know your cost basis, they can assume your entire sale amount is profit. That means you could end up paying more tax than you actually owe. Keeping accurate records — and making sure your broker has them — is critical for correct tax reporting.
The IRS requires brokers to track cost basis in specific ways:
Specific unit allocation – Taxpayers can choose which exact unit of a digital asset they are selling. This works when you bought coins at different times and prices, and you want to sell the ones with the highest cost to minimize gains.
Global unit allocation – If you don’t specify, brokers may use a global allocation method. This spreads the cost across all units held, based on your records at the broker.
Average cost is not allowed – Unlike some countries, the U.S. doesn’t allow taxpayers to average their purchase price across all units of a digital asset.
If cost basis data isn’t available, the IRS will assume you have no record of what you originally paid. In that case, you may owe tax on the entire gross proceeds of the sale.
For example:
You bought 1 ETH for $2,000.
You later sold it for $3,500.
With a recorded cost basis, your taxable gain is $1,500.
Without cost basis, the IRS may treat the full $3,500 as taxable income.
Cost basis reporting isn’t optional. It’s the foundation of crypto tax compliance. Without it, you risk overstating your crypto gains and paying unnecessary tax.
Form 1099-DA will change how crypto taxes are reported. Starting with the 2025 tax year, brokers must send both you and the IRS detailed reports of your digital asset transactions. That means there’s less room for error and less flexibility if you don’t have your own records in order. The best way to avoid mistakes and penalties is to prepare now.
Here are some steps to take:
Use crypto tax software
Automated tools help organize thousands of crypto transactions across multiple wallets and exchanges. Software can track cost basis, calculate gains or losses, and generate reports that match IRS reporting requirements.
Keep detailed records
Don’t rely only on your broker. Save data on:
acquisition date
fair market value at the time of the trade
transaction fees
wallet addresses (when relevant)
proceeds when selling
These records support accurate reporting if the IRS audits your tax return.
Learn what creates taxable income
Not every crypto event is the same. Selling, swapping, or using crypto for payments usually triggers capital gains tax. But earning rewards, airdrops, or staking payouts may be treated as ordinary income. Knowing the difference helps you plan ahead.
Work with a tax professional
If you have complex digital asset sales, DeFi activity, or NFT reporting, a tax professional can help you file correctly. They can also review ways to reduce tax liabilities while staying compliant.
Check your broker records
Make sure the personal details your broker has (like your Taxpayer Identification Number) are correct. Errors in their system could mean mismatches on your Form 1099-DA and cause IRS notices.
Mistakes in tax reporting can increase your tax bill.
Missing records can lead to overstating capital gains.
Early planning lowers your compliance burden once new rules take effect.
The IRS is stepping up its oversight of digital asset transactions. With Form 1099-DA, brokers will send the same information to both you and the Internal Revenue Service. That means the IRS can directly compare what you report on your tax return to what brokers submit.
If the numbers don’t match, the IRS may flag your filing. Even small mistakes can raise questions, and repeated errors increase your risk of an audit.
Failing to report digital asset sales or underreporting taxable income can lead to:
Accuracy penalties – charged when your reported tax doesn’t match what you actually owe.
Interest on unpaid taxes – added daily until you pay the balance.
Higher chance of an audit – mismatches between your return and broker forms often trigger reviews.
Tax evasion charges – in severe cases where intentional underreporting is found.
In the past, the IRS relied on self-reporting for most crypto transactions. Many taxpayers assumed the lack of direct reporting made mistakes less noticeable. That changes with 1099-DA. Starting in early 2026, both taxpayers and the IRS will receive identical forms from brokers, leaving little room for underreporting.
Match your records to the gross proceeds reported on Form 1099-DA.
Use crypto tax software to align all wallets and exchanges.
Double-check cost basis calculations before filing.
Work with a tax professional if you have complex activity or missing data.
Key Point: The IRS will now have a clear window into your digital asset activities. Accurate reporting is the best protection against penalties and audits.
Form 1099-DA will be mandatory starting with the 2025 tax year. That means your crypto transactions will be reported directly to the IRS in 2026. You can’t afford reporting mistakes.
At Count On Sheep, we make compliance simple:
We track your digital asset transactions across wallets and exchanges.
We prepare accurate reports that match IRS expectations.
We help you calculate capital gains, income, and cost basis.
We keep your data secure while reducing your risk of penalties.
Don’t wait until tax season. The rules are changing, and the IRS will have more visibility than ever.
Choose Count On Sheep to stay compliant, save money, and avoid IRS headache
Form 1099-DA is the IRS’s first form specifically for digital asset transactions. It reports digital asset proceeds from broker transactions, helping taxpayers calculate capital gains and ordinary income. Think of it like Form 1099-B for stocks, but for crypto.
Applies to digital asset sales or exchanges after January 1, 2025.
Brokers will issue the first forms in early 2026.
Taxpayers must report these transactions on their 2025 tax returns.
Form 1099-DA is issued by:
Digital asset brokers – anyone who actively facilitates transactions for customers.
Exchanges – centralized and custodial.
Wallet providers – if they function as custodians.
Payment processors – if they handle digital asset payments.
No. Currently, the form excludes:
Staking rewards
Mining income
Airdrops
Even though these are taxable, they won’t appear on 1099-DA. You still need to include them in your tax return.
If a broker doesn’t provide cost basis, you are responsible for:
Calculating it using your records.
Using crypto tax software to track gains and losses.
Accurate cost basis reporting is key to tax compliance and reducing your tax liabilities.
You must still report all digital asset transactions on your tax return. The IRS expects full disclosure. Not receiving the form does not remove your reporting obligations.
Selling crypto for fiat (USD, EUR, etc.)
Trading one crypto for another
Using crypto to buy goods or services
Each event may generate capital gains or ordinary income.
Yes. NFT sales exceeding $600 in a year must be reported, either individually or in aggregate. Transaction fees may reduce your gross proceeds.
Absolutely. A tax advisor or CPA can:
Ensure your digital asset reporting is accurate.
Help you file crypto taxes using 1099-DA information.
Advise on cost basis and capital gains tax strategies.