Resource Center

Form 1099-DA: What It Is, What It Means, and What You Need to Do.

The IRS changed the rules in 2025. Here is what every crypto investor needs to understand before they file.

IRS Form 1099-DA for digital asset reporting

What Changed

What is Form 1099-DA?

Every crypto exchange must now report your transaction data — proceeds, dates, asset types — directly to the IRS before you file your return. The IRS algorithm matches that data against your return automatically. Mismatches generate CP2000 notices with no human review.

The form is filed with the IRS and a copy is provided to the customer. Beginning with the 2025 tax year, brokers report gross proceeds. Cost basis reporting follows in subsequent years.

This page is educational only. Always consult your CPA, tax attorney, or enrolled agent for advice specific to your situation.

Form 1099-DA at a glance

Filed by the broker, copy issued to the customer
Reports gross proceeds from sales and dispositions
Cost basis reporting phases in over multiple years
IRS uses it for automated matching against your return

Form 1099-DA — effective for tax year 2025 and beyond.

What It Means for You

Three patterns that produce IRS notices.

Ghost Basis

If your cost basis is missing, the IRS treats it as $0. Every dollar of proceeds becomes fully taxable. Ghost Basis arises when assets move between wallets and exchanges without documentation.

Automatic Matching

There is no longer a gap between what you report and what the IRS already knows. Their algorithm matches exchange data against your return automatically and flags discrepancies.

Burden of Proof

The IRS does not have to prove anything. You do. When a mismatch surfaces, the burden of documentation falls entirely on the taxpayer.

IRS CP2000 notice for income discrepancy

CP2000 Notices

What Is a CP2000 Notice?

A CP2000 is an automated IRS notice generated when your filed return does not match third-party data the IRS received. For crypto investors, this means exchange-reported proceeds that do not match your Schedule D. The notice proposes additional tax, penalties, and interest.

01
The reporting period
Confirm the tax year and your identity. Do not respond to a notice that does not match your records.
02
Items reported by third parties
Compare line by line to the 1099-DA, 1099-B, and other returns issued to you.
03
Items shown on your return
Locate every item on your filed Schedule D, Form 8949, and supporting workpapers.
04
The proposed change
The IRS computes the difference and proposes additional tax, interest, and penalties.
05
Response options and deadline
Agree, disagree with explanation, or partially agree. The deadline is firm. Engage your CPA immediately.

Be Ready

A short checklist before the next filing season.

Reconcile every wallet and exchange against your records

Document cost basis for each lot at the time of acquisition

Note transfers between your own wallets so they are not treated as sales

Capture staking and reward income at the date of dominion and control

Build a Defense Memo for any material position taken on the return

Confirm 1099-DA and 1099-B copies match your reconciled file

Downloadable Resources

Reference materials and guides.

The Crypto Tax Threat Matrix

A strategic assessment of risk in the era of AI-driven enforcement. How to determine if your crypto reporting is at risk.

Download PDF

CPA Professional Briefing

The Crypto Audit-Ready Client Kit. Cleaner records in, safer returns out. A professional briefing for CPAs.

Download PDF

Self-Assessment

Score your 1099-DA exposure in five minutes.

The Crypto Tax Threat Matrix flags the categories that score your personal trading characteristics that make you more at risk. Free, no obligation.

View Tax Sentinel™ Schedule a Consultation

Free Self-Assessment

Free

The Crypto Tax Threat Matrix

A free self-assessment to determine your IRS scrutiny risk and tax return exposure. Identify the gaps before the IRS does.