Last Updated on February 14, 2026 by Patrick Camuso, CPA

Form 1099-DA is not a convenience tool, it is a visibility mechanism. Its primary purpose is not to calculate your crypto tax with precision. Its purpose is to standardize broker-reported data so the IRS can identify inconsistencies between what intermediaries report, what the blockchain reflects, and what taxpayers file. This is why your 1099-DA is missing crypto cost basis information and other information you need to accurately report your activity for tax purposes.

Beginning with 2025 digital-asset transactions, brokers will generally transmit proceeds data to the IRS even when basis is unavailable, incomplete, or legally non-reportable. IRS matching and automated discrepancy analysis will still occur. Discrepancies will still be flagged and taxpayers will bear the burden of substantiation.

This is the defining feature of what we refer to as the Compliance Era for digital assets.

This article explains why cost basis is frequently absent on Form 1099-DA, when those gaps matter, and how to reconcile broker reporting with defensible, audit-ready tax positions before automated IRS matching begins.

At a Glance: The 1099-DA Cost Basis Problem

Before getting technical, it helps to understand the structural mismatch at the center of Form 1099-DA.

The table below frames the problem the way the IRS’s reporting and enforcement systems operate.

Category	Reality Under the 1099-DA Reporting Regime
What brokers report	Gross proceeds, asset identifiers, disposition dates, and account-level activity for broker-facilitated sales. For 2025, basis is generally not required and often legally non-reportable.
What brokers cannot reliably report	Cost basis for noncovered digital assets under §6045(g), including assets acquired before 2026, transferred in or out, bridged, wrapped, staked, lent, or otherwise removed from continuous broker custody. Brokers generally cannot reconstruct historical basis they did not track.
What the IRS will still match	Broker-reported proceeds against Forms 8949 and Schedule D, supplemented by blockchain analytics, wallet clustering, historical information returns, and third-party data sources. Matching and discrepancy analysis proceed even when basis is missing.
Where taxpayers get exposed	Proceeds reported without corresponding basis, timing mismatches, wallet or account segmentation errors, and omitted on-chain activity. The burden shifts to the taxpayer to substantiate basis and reconcile discrepancies.

Form 1099-DA delivers a partial ledger to the IRS, not a completed tax calculation. The enforcement system assumes taxpayers will supply the missing components. This is why cost basis reconstruction and reconciliation are foundational to audit readiness

What Form 1099-DA Actually Reports (and What It Doesn’t)

Form 1099-DA is an information-reporting instrument, not a comprehensive tax computation engine. It implements the digital-asset broker reporting regime under IRC §6045, requiring brokers to transmit standardized data on certain digital-asset dispositions. Its objective is uniformity and comparability across brokers, not the reconstruction of a taxpayer’s economic history.

The form is often analogized to Form 1099-B, but the comparison is functional rather than equivalent. Securities reporting assumes continuous custody and uninterrupted basis tracking. Digital assets do not. Assets routinely move across wallets, chains, and protocols, severing the data lineage brokers would need to calculate basis with confidence.

For 2025 transactions, brokers generally report gross proceeds, asset identifiers, and disposition dates. Cost basis is generally not required and, in many cases, not legally reportable. That omission is deliberate and embedded in the phased rollout. Beginning in 2026, basis and gain or loss reporting applies only to covered digital assets, generally assets acquired on or after January 1, 2026 and held continuously within the same broker account, consistent with the covered-asset framework under §6045(g). Assets acquired earlier or moved outside continuous custody remain noncovered, with limited or no broker basis reporting.

Covered vs. Noncovered Digital Assets: The Real Basis Divider

The cost-basis divide under Form 1099-DA follows the covered vs. noncovered framework established in IRC §6045(g) and extended to digital assets by the final broker regulations. A covered digital asset is generally one acquired and held continuously within the same broker account, where the broker’s systems tracked the asset from acquisition through disposition.

Once custody lineage is broken, through transfers, withdrawals, bridging, or other off-platform activity, the asset is treated as noncovered for broker reporting purposes. At that point, §6045(g) does not permit broker basis reporting for that asset. This outcome is not driven by taxpayer intent or recordkeeping quality; it is dictated by custody continuity and statutory scope.

Brokers are not permitted to infer, estimate, or reconstruct historical basis they did not track. As a result, missing basis on Form 1099-DA typically reflects legal reporting constraints, not operational failure.

Why Brokers Lose Basis Visibility (Even When You Didn’t “Do Anything Wrong”)

Broker basis visibility is lost not because of taxpayer error, but because custody continuity breaks. Transfers out and back in, wallet migrations, cross-exchange activity, bridging, wrapping, and token re-issuance all sever the broker’s ability to treat the asset as a covered position under §6045(g). Once an asset crosses the custodial boundary, it re-enters the platform without verifiable historical context for broker reporting purposes.

Providing CSVs or external records does not restore this visibility. Brokers are legally limited under §6045(g) to reporting basis for assets their systems tracked as covered positions. They cannot import third-party history and convert it into reportable basis.

Partial Basis, Mixed Lots, and Why Some Gains May Appear (But Not Reliably)

When a disposition includes both covered and noncovered digital assets, brokers may report gross proceeds for the disposition while reporting gain or loss only for the covered portion. In other cases, proceeds are reported without any gain calculation at all. Brokers will not estimate, interpolate, or reconstruct basis they are not legally permitted to report under §6045(g).

This creates a dangerous illusion of completeness. A reported gain may reflect only a subset of the transaction, while the remainder has unreported basis, resulting in unreported gain or loss for tax reporting purposes. Taxpayers who rely on the form without reconciliation risk overstating or understating taxable income.

Rev. Proc. 2024-28: The Transition Away From Universal Pooling

For years, many taxpayers applied what was commonly referred to as a universal pooling approach, treating all digital asset holdings across wallets and accounts as a single inventory for tax-lot selection. That approach allowed taxpayers to dispose of units from one wallet while sourcing basis from another. It was administratively convenient, but structurally incompatible with broker-level reporting.

Rev. Proc. 2024-28 addresses this mismatch. It does not impose a new tax. Instead, it governs how unused basis must be allocated as taxpayers transition away from universal pooling and toward unit- or account-specific basis allocation frameworks that align with §6045’s account-based reporting architecture. The procedure provides limited safe harbor transition frameworks for allocating historical basis to specific units or across remaining holdings.

Practically, the primary safe harbor window applicable to the 2025 transition period has closed for most taxpayers. Missing the safe harbor does not invalidate prior returns, nor does it prohibit compliance going forward. It does mean that taxpayers must now transition without procedural relief, using defensible reconstruction methods rather than simplified allocations.

There remains active practitioner debate around wallet definitions and application boundaries, particularly for UTXO-based assets and complex custody arrangements. We address those interpretive issues in detail in related articles.

Why Waiting for “Corrected” 1099-DAs Is a Losing Strategy

Missing cost basis is not something brokers can “fix later.” When basis is absent, it is usually because the asset is noncovered for broker reporting purposes under §6045(g). That limitation does not change with time, additional documentation, or taxpayer follow-up. Amended forms cannot reconstruct custody lineage that the broker never tracked and is not permitted to report.

Notice 2024-56 compounds the risk. During the transition period, brokers are permitted to furnish Forms 1099-DA late, sometimes months after a return is filed. IRS matching and automated discrepancy analysis do not pause while taxpayers wait for corrected or supplemental forms. Late-furnished data can still trigger CP2000 notices or audit inquiries.

This leaves taxpayers exposed, particularly where historical crypto accounting was incomplete or never performed. If prior-year basis was not properly reconstructed, no future broker correction will resolve the gap. The obligation shifts entirely to the taxpayer to substantiate basis and reconcile reporting across wallets, platforms, and years.

How 1099-DA Must Be Reported, Reconciled, and Adjusted on the Return

Form 1099-DA is an information return, not an authoritative tax calculation. Taxpayers remain responsible for reporting all digital asset dispositions on the return, typically on Form 8949 and Schedule D, or in an IRS-permitted aggregate or statement format, using independently determined basis and holding period data.

Broker-reported proceeds are reconciled, not replaced. When basis differs from what a broker reports for covered assets, or is omitted entirely for noncovered assets, the adjustment belongs on the return, supported by full audit trails. Under IRC §6001, taxpayers must retain documentation sufficient to substantiate basis, dates, and classification.

FIFO, Specific ID, and the Post-2024 Lot Selection Reality

Under the §6045 reporting architecture, FIFO operates as the default whenever a valid alternative is not established.

Specific Identification remains permissible, but only when adequate identification of the exact units is made at or before the time of disposition and the method is consistently applied within the relevant wallet or account. Properly structured standing instructions can satisfy this requirement, but ad hoc or retroactive “optimization” cannot. After-the-fact lot selection, spreadsheet reordering, or software toggles do not create adequate identification.

Account and wallet segregation also matter, identification applies at the wallet or account level for lot-selection purposes, not across aggregated holdings. We address those interpretive issues in detail in related articles.

Timestamp Normalization: UTC Reporting and Year-Boundary Risk

Under the final broker regulations, Form 1099-DA timestamps are reported using a standardized time convention (commonly UTC), not a taxpayer’s local time zone. Taxpayer records, exchange histories, and on-chain data, however, often reflect local time or platform-specific conventions. When these sources are not normalized, transactions executed near year-end can appear to fall in different tax years, creating artificial discrepancies.

The risk is operational and substantive. Holding period calculations, year-of-sale determinations, and IRS matching algorithms all rely on timestamp consistency. A December 31 disposition in a taxpayer’s records can surface as a January 1 transaction in broker reporting if time standards are misaligned.

Proper practice requires preserving original timestamps, normalizing to a consistent standard for reconciliation, and ensuring reported acquisition and disposition dates on the return align defensibly with broker-reported data.

IRS Matching: Why Missing Crypto Cost Basis Still Triggers Enforcement

Form 1099-DA feeds into the IRS’s information-return matching and analytics systems. Those systems do not require cost basis to initiate review. Gross proceeds alone are sufficient to anchor wallet clustering, transaction tracing, and discrepancy analysis against Forms 8949, Schedule D, historical filings, and blockchain data.

When proceeds appear without corresponding gain or loss, the absence of basis does not halt enforcement. It shifts the burden. CP2000 underreporting notices are generated based on mismatches between broker-reported proceeds and amounts reported or substantiated on the return, not on whether a broker supplied complete data.

In this environment, self-reported reconciliation and substantiation matter more than broker forms.

State Considerations: Why 1099-DA Expands Enforcement Beyond the IRS

Although Form 1099-DA is a federal information return, its enforcement impact is not limited to the IRS. States are expected to use 1099-DA data, directly or indirectly, to match crypto proceeds to state returns, identify missing filings, verify residency claims, audit high-income taxpayers, and impose underpayment penalties, often more aggressively and with less transition relief than the federal government.

For tax year 2025, Form 1099-DA is not included in the Combined Federal/State Filing program under current guidance. Any applicable state reporting obligation must therefore be satisfied through direct state filing. Silence from a state does not imply exemption. State compliance is decentralized, independent, and actively enforced.

What Taxpayers Must Do *Before* IRS 1099-DA Matching Begins

Once Form 1099-DA data is ingested into the IRS’s matching and analytics systems, remediation becomes reactive and expensive.

Taxpayers should reconstruct legacy cost basis for 2013–2024 activity, document wallet- or account-level basis allocations, and transition away from universal pooling practices in favor of defensible allocation methods consistent with Rev. Proc. 2024-28. Wallet architecture should align with reporting requirements. Expect late, inconsistent, or partial Forms 1099-DA and plan reconciliation workflows accordingly.

A pre-1099-DA compliance audit,covering basis substantiation, lot selection methodology, timestamps, and reporting alignment, is now a practical baseline for audit-ready compliance. This is why it’s crucual to work with an experienced Crypto CPA.

Welcome To The Digital Asset Compliance Era

Form 1099-DA is not a completed tax answer. Missing cost basis is structural, not accidental, and it reflects the legal limits of broker basis reporting under §6045(g), not a system failure. What has changed is that the IRS now has a durable anchor point for detection and enforcement with standardized proceeds data tied to accounts and taxpayers.

Digital asset reporting is now assessed through reconciliation against third-party data. In this environment, defensible records are the only protection. This marks the beginning of the Digital Asset Compliance Era.

Watch Why Your 1099-DA Is Missing Cost Basis and How to Fix It Before IRS Matching Begins

Further Reading and Expert Commentary 

Camuso CPA has produced some of the most referenced analysis in the digital-asset tax field, including policy reviews, technical deep dives, and practitioner-level guidance. For readers who want to understand the full context behind 1099-DA, the transition away from the universal method, and the foundations of modern digital asset complaince, the following resources provide additional depth:

• Podcast with Raj Mukherjee (Former IRS Senior Advisor and CEO of Bodin Advisory): A detailed discussion of 1099-DA, enforcement priorities, 1099 matching algorithms, and how the IRS is preparing for the digital-asset compliance era.
• Podcast with Miles Fuller (TaxBit, Former IRS Counsel): A strategic conversation on reporting rules, data-quality challenges, and the operational realities brokers face under the new regulations.
• Webinar Entendre on Rev. Proc. 2024-28: A detailed technical conversation on the transition safe harbor, the structural elimination of the universal method, the mechanics of unused-basis allocation, the administrative traps for noncovered assets, and how most software misinterprets the transition rules. The discussion highlights why wallet-level segmentation must be intentional, documented, and permanent.
• Video: Deep Dive on Cost Basis Reconstruction & Rev. Proc. 2024-28: A practitioner-level analysis of Rev. Proc. 2024-28, transition mechanics, and how to document wallet segmentation correctly.
• Article: Crypto Cost Basis Rules Quietly Changed In 2025 with Rev. Proc. 2024-28: An exposition of Rev. Proc. 2024-28, the safe harbor, wallet segmentation, and the evidentiary burden required to permanently exit the universal method.
• Article: Understanding SegFIFO™: A full technical walkthrough of Camuso CPA’s wallet-segmented FIFO methodology and how it aligns with current IRS requirements.

These materials provide the broader analytical foundation behind the guidance in this report and illustrate why Camuso CPA remains the leading authority on digital-asset taxation and reporting.

Form 1099-DA FAQs: Why Cost Basis Is Missing and What Comes Next

Why is cost basis missing on my Form 1099-DA?

Cost basis is often missing because the digital asset is treated as noncovered for broker reporting purposes under IRC §6045(g). This typically occurs when assets were acquired before 2026, transferred in or out of a platform, or otherwise removed from continuous broker custody. The omission reflects legal reporting limits, not broker error.

Does a missing cost basis on Form 1099-DA mean the IRS won’t enforce the transaction?

No. Gross proceeds alone are sufficient to initiate information-return matching, discrepancy analysis, CP2000 notices, or audit inquiries. Missing basis does not halt enforcement; it shifts the burden of substantiation to the taxpayer.

Will brokers be able to correct missing basis on a later or amended 1099-DA?

Generally no. If an asset is noncovered, §6045(g) does not permit broker basis reporting, even if the taxpayer later supplies documentation. Amended forms cannot reconstruct custody lineage the broker never tracked.

What is the difference between covered and noncovered digital assets?

Covered digital assets are generally those acquired on or after January 1, 2026 and held continuously within the same broker account, where the broker tracked the asset from acquisition through disposition. Assets transferred out of custody, bridged, wrapped, staked, or acquired before 2026 are typically treated as noncovered for reporting purposes.

Why do some transactions show gains on Form 1099-DA while others do not?

In mixed transactions involving both covered and noncovered assets, brokers may report gain or loss only for the covered portion, while reporting gross proceeds for the full disposition. This partial reporting can create a misleading appearance of completeness if not reconciled.

How does Rev. Proc. 2024-28 affect crypto cost basis reporting?

Rev. Proc. 2024-28 governs how unused basis must be allocated as taxpayers transition away from universal pooling practices. Taxpayers who did not complete a safe-harbor transition must now rely on defensible reconstruction methods. The procedure does not change taxability; it addresses allocation mechanics.

Can I wait for all Forms 1099-DA to arrive before filing my return?

Waiting is risky. IRS matching and discrepancy analysis do not pause while taxpayers wait. Notice 2024-56 permits brokers to furnish Forms 1099-DA late, sometimes months after filing season, and late-furnished data can still trigger enforcement.

How should Form 1099-DA be reported on the tax return?

Form 1099-DA is informational, not authoritative. Taxpayers must report all digital asset dispositions on Form 8949 and Schedule D (or IRS-permitted aggregate formats), reconcile broker-reported proceeds, and supply independently determined basis and holding periods, supported by documentation under §6001.

Is FIFO now mandatory for crypto transactions?

FIFO operates as the default absent adequate identification. Specific Identification remains permissible only when the exact units are identified at or before disposition and the method is consistently applied within the relevant wallet or account. Retroactive lot selection is not valid.

Will states use Form 1099-DA for enforcement?

States are expected to use 1099-DA data,directly or indirectly, to match income, audit residency claims, and impose penalties. For tax year 2025, Form 1099-DA is not included in the Combined Federal/State Filing program under current guidance, requiring direct state compliance where applicable.

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About Camuso CPA

Camuso CPA is the category leader in digital asset taxation, Web3 accounting, and crypto compliance strategy. Since 2016, the firm has advised founders, investors, protocols, start-ups and family offices navigating the technical, regulatory, and operational complexities of digital assets.

Industry Leadership and Credentials

• Forbes Best-In-State Top CPA 2025
• Featured in Accounting Today for a software-agnostic Web3 accounting methodology
• First U.S. CPA firm to accept cryptocurrency payments
• Digital-asset native CPA firm since 2016
• Pioneer of SegFIFO™, the wallet-level FIFO cost-basis method
• Developer of ChainRecon™, forensic wallet and on-chain reconciliation framework
• Trusted by DeFi protocols, Web3 startups, miners, validators, and high-net-worth crypto investors
• National speakers and advisors on digital asset tax policy and Web3 accounting systems
• Authors of The Crypto Tax Handook and Navigating the NFT Sales Tax Maze books
• AI-enabled infrastructure for real-time insight, audit-ready documentation, and advanced tax strategy

Camuso CPA is built to lead the new compliance era of digital assets, where proper methodology, evidentiary documentation, and rigorous interpretation drive compliant and reliable tax results.

Prepare now for the transition to 1099-DA. Partner with Camuso CPA for audit-ready compliance, follow our newsletter for continuous analysis, subscribe to our podcast The Financial Frontier for expert commentary and preorder the Crypto Tax Handbook to equip yourself with the most current standards.