Form 1099-DA for Digital Assets: How to Determine Your Cost Basis When the Broker Didn't Report It

If you sold, exchanged, or otherwise disposed of cryptocurrency in 2025, you probably received a brand-new tax document this year: Form 1099-DA, Digital Asset Proceeds From Broker Transactions. Millions of crypto investors got their first Form 1099-DA in early 2026 — and many of them discovered the same unsettling problem: the form shows what they sold their digital assets for, but says nothing about what they paid for them.

That missing number is your cost basis, and without it you cannot correctly calculate your capital gain or loss. Worse, if you leave it blank, the IRS may treat your basis as zero — meaning you could be taxed on the entire sale amount instead of just your profit.

This guide explains what Form 1099-DA is, why the cost basis box is empty on so many forms, and — most importantly — how to reconstruct your basis correctly and legally when the broker didn't report it.

What Is Form 1099-DA and Why Did You Receive One?

Form 1099-DA is the IRS's first information return designed specifically for digital assets. It was created by the final broker reporting regulations issued under Section 6045 of the tax code in 2024 and applies to transactions occurring on or after January 1, 2025.

Under these rules, custodial digital asset brokers — centralized exchanges such as Coinbase, Kraken, and Gemini, certain payment processors, and hosted wallet providers — must report your sales and exchanges of digital assets to both you and the IRS, much the way stockbrokers have reported securities sales on Form 1099-B for years.

The first wave of Forms 1099-DA, covering 2025 transactions, was furnished to taxpayers in early 2026. From now on, this form is a permanent part of crypto tax life: the IRS receives its own copy of every Form 1099-DA and matches it against your Form 1040. Ignoring the form is not an option — automated matching means a missing or mismatched entry can generate a CP2000 notice long before a human ever looks at your return.

One important carve-out: after Congress used the Congressional Review Act in April 2025 to repeal the separate regulations targeting decentralized (non-custodial) platforms, DeFi protocols and self-custody wallets do not issue Form 1099-DA. If you traded on a DEX or held coins in your own wallet, the reporting — and the basis tracking — is entirely on you.

The Form 1099-DA Reporting Timeline: Proceeds First, Basis Later

The most confusing feature of Form 1099-DA is its phased rollout:

Tax year	What brokers must report on Form 1099-DA
2025 (forms received in 2026)	Gross proceeds only — the amount you received from each sale or exchange
2026 (forms received in 2027)	Gross proceeds plus cost basis — but generally only for "covered" assets acquired in the same account on or after January 1, 2026

In other words, for the 2025 tax year, brokers were not required to report cost basis at all. And even beginning with 2026 transactions, basis will appear only for assets you both bought and sold on the same platform after the effective date. Coins you transferred in from another exchange or a private wallet will typically remain "noncovered" — their basis stays your responsibility indefinitely.

The IRS acknowledged the transition pains: Notice 2024-56 provides penalty relief for brokers making good-faith efforts in the first year, and Notice 2024-57 temporarily exempts complex transactions — wrapping and unwrapping, liquidity-provider transactions, staking, crypto lending, and short sales — from Form 1099-DA reporting until further guidance.

Why the Cost Basis Box on Your Form 1099-DA Is Empty

There are several common reasons the basis is missing or wrong on a Form 1099-DA:

1. The 2025 phase-in. As explained above, brokers simply weren't required to report basis for 2025 transactions.

2. Transferred-in assets. You bought Bitcoin on Exchange A in 2021, moved it to Exchange B in 2024, and sold it in 2025. Exchange B never knew what you paid — it only saw the incoming transfer.

3. Self-custody. Coins moved in from a hardware or software wallet arrive with no purchase history attached.

4. Earned crypto. Assets received from mining, staking, airdrops, or as payment for services have a basis equal to their fair market value at receipt — something the broker has no way to know.

5. Old records. Exchanges that shut down (or accounts you closed) may have taken your transaction history with them.

Whatever the reason, the tax rule is unchanged: you, the taxpayer, are responsible for establishing your cost basis. The absence of basis on Form 1099-DA does not reduce your obligation — and it certainly doesn't mean your basis is zero, unless you let it default to that.

How to Determine Cost Basis When Form 1099-DA Doesn't Show It

Here is a practical, step-by-step framework for reconstructing basis the IRS will accept.

Step 1: Identify How You Acquired the Asset

Your starting point depends on the acquisition method:

• Purchased with dollars: basis = purchase price + transaction fees and commissions.

• Received from mining, staking, or airdrops: basis = the fair market value (in USD) of the coins on the date you received them — the same amount you should have reported as ordinary income that year.

• Received as payment for goods or services: basis = the FMV included in your income when you were paid.

• Received as a gift: you generally take the donor's basis (carryover basis); if the asset had declined in value at the time of the gift, special dual-basis rules apply for calculating losses.

• Inherited: basis is generally "stepped up" to the fair market value on the decedent's date of death.

• Crypto-to-crypto trades: when you swapped ETH for SOL, the SOL's basis equals the FMV of the ETH given up at the moment of the trade (and that swap itself was a taxable disposal of the ETH).

Step 2: Gather the Evidence

The IRS accepts basis reconstructed from credible records. Collect:

• Exchange transaction history exports (CSV). Even if an exchange didn't report basis on Form 1099-DA, nearly all of them let you download complete trade histories — including from closed accounts, if you request it.

• Blockchain explorers. For on-chain transactions, tools like Etherscan or a Bitcoin block explorer document dates and amounts; you then pair each transaction with the historical price on that date from a reputable price aggregator.

• Bank and card statements showing fiat deposits to exchanges — useful corroboration of purchase amounts.

• Crypto tax software. Platforms that sync with exchanges via API and read public wallet addresses can rebuild years of history and compute basis automatically under IRS-compliant methods. For active traders, this is usually the fastest route.

• Old emails and confirmations. Trade confirmations, withdrawal notices, and receipts all count as supporting documentation.

Step 3: Apply the Right Accounting Rules

Since January 1, 2025, basis must be tracked wallet by wallet and account by account — the old "universal" method, which pooled all your holdings across every platform into one big basket, is no longer permitted.

If you previously used the universal method, Revenue Procedure 2024-28 provided a safe harbor: taxpayers could allocate their unused basis across wallets and accounts as of January 1, 2025, using either specific unit allocation or a global allocation approach. If you made that allocation on time, your per-wallet basis is now locked in and defensible. If you missed it, you still must transition to wallet-by-wallet accounting — do it now, with your tax professional, and document your methodology.

Within each wallet or account, the default ordering rule is FIFO (first-in, first-out) unless you made an adequate specific identification of the units sold. For 2025 transactions, Notice 2025-7 offered transition relief that allowed taxpayers to make that identification in their own records rather than through the broker — but that relief expired on December 31, 2025. Starting with 2026 transactions, specific identification generally must be communicated to the broker by the settlement date, so set your preferred lot-selection method with your exchange in advance.

Step 4: Reconcile and Report on Form 8949

Report each disposal on Form 8949, which flows to Schedule D. When your Form 1099-DA shows proceeds but no basis:

• Enter the proceeds as reported by the broker (the IRS will match this figure);

• Enter your reconstructed cost basis;

• Use the appropriate adjustment code if you need to correct anything the broker did report incorrectly;

• Keep a reconciliation workpaper showing how you got from the broker's numbers to yours.

Never simply copy a basis-less Form 1099-DA into your return as if the basis were zero when you actually paid real money for the asset — that mistake overstates your gain and your tax.

What If You Genuinely Cannot Establish Basis?

If, after honest effort, you cannot document what you paid, the conservative default is a zero basis — the entire proceeds become taxable gain. That is painful, but it protects you in an audit. Before you accept it, a reasonable estimation supported by partial records (deposit history, dated blockchain activity, historical price data) is usually still defensible; courts and the IRS have accepted reasonable basis reconstructions where the taxpayer showed a credible, documented method. What is not defensible is an unsupported guess. When in doubt, involve a crypto-experienced tax professional.

Penalties, IRS Matching, and Why This Matters Now

With Form 1099-DA, the IRS has, for the first time, third-party visibility into crypto proceeds at scale. Every form is matched against filed returns. Underreporting can trigger accuracy-related penalties of 20%, plus interest — and unanswered mismatches escalate. Remember, too, that everyone filing a Form 1040 must answer the digital asset question on page one under penalties of perjury.

The good news: taxpayers who track basis proactively, use the wallet-by-wallet method correctly, and keep documentation have nothing to fear from the new regime. The transition year is exactly the right time to get your records in order — before basis reporting expands in 2027 and the matching becomes even tighter.