Summary
- The Internal Revenue Service has begun receiving 1099-DA filings and proceeds reports from digital-asset brokers in earnest this year.
- But because cost basis information is generally not subject to reporting, investors face a heavier burden to trace their full transaction histories and calculate their actual gains and losses and taxes.
- Surveys and tax professionals say filing confusion is emerging because of missing 1099-DA entries, incomplete reporting, and differences in document formats across exchanges, raising a "zero cost basis" issue.
Forecast Trend Report by Period
The Internal Revenue Service has begun broadly receiving digital-asset transaction reports from exchanges this year. But investors are facing a heavier tax-filing burden because cost-basis information is missing from many of the filings.
Cointelegraph reported on September 25 that US digital-asset investors are using the newly introduced 1099-DA to file taxes on their 2025 transactions. Form 1099-DA is the tax document digital-asset brokers, including exchanges, use to report customers' digital-asset sales to the IRS.
The problem is that for 2025 transactions, brokers must report proceeds, or the amount a digital asset was sold for, but generally are not required to report cost basis, or the amount an investor originally paid for the asset. For example, if an investor bought Bitcoin for $9,000 and sold it for $10,000, the actual profit is $1,000. But the IRS may receive only the $10,000 sale proceeds.
As a result, investors must review their entire transaction history across exchanges and personal wallets to calculate their actual gains or losses. Those who moved digital assets between multiple exchanges and self-custodied wallets may have to trace purchase prices, fees, and deposit and withdrawal records over several years.
Confusion is already emerging in the filing process. In a survey of 1,000 US investors conducted last month by crypto tax service provider Awaken Tax, 21% of respondents who had applied for or planned to apply for a filing extension said they had not yet received the necessary information from an exchange or platform. About 20% also said the 1099-DA forms they received were incomplete or that they were unsure whether the documents accurately reflected their transaction history.
Tax professionals are also finding cases where the 1099-DA forms provided by exchanges do not match investors' actual records. Sharon Yip, founder of Crypto Tax Advisors, said some clients found transactions missing from their 1099-DA forms, while document formats and cost-basis disclosures also varied by exchange.
Industry participants say the IRS now has greater visibility into investors' digital-asset sales, but still lacks the information needed to calculate taxable income accurately. Andrew Gordon, managing attorney at Digital Asset Tax Action, said the 1099-DA reports only 2025 sale proceeds, increasing IRS visibility, but the absence of cost-basis data creates a "zero cost basis" problem.
Uk Jin
wook9629@bloomingbit.ioH3LLO, World! I am Uk Jin.