Key takeaways
- The 2025 Form 1099-DA reports gross proceeds; basis reporting applies to sales effected after 2025, so 2026 sales can arrive with basis.
- Match every wallet transfer by transaction hash so it is not counted as a sale or as income.
- Answer the Form 1040 digital asset question Yes if the client received any reward or disposed of any digital asset.
Start with Form 1099-DA and check what it leaves out
For 2025 sales, the broker must report gross proceeds on Form 1099-DA. Basis reporting applies only to certain sales effected after 2025, so a 2025 sale normally arrives with no cost basis.
The 2026 instructions define a covered security as a digital asset acquired after 2025 in a custodial account and held there until disposition. A coin bought in 2025 fails that test, so its 2026 sale is noncovered. Basis reporting for noncovered sales is voluntary, so check the box code before assuming basis is missing.
The same instructions give the Form 8949 codes: G is short-term, basis reported; H is short-term, basis not reported; J is long-term, basis reported; K is long-term, basis not reported; Y is holding period unknown.
Two de minimis rules can keep a sale off the form. Designated stablecoin sales need not be reported when aggregate gross proceeds do not exceed $10,000 for the year. For payment processor (PDAP) sales, a customer at $600 or less for the year need not be reported. Above $600 for the year, all of that customer's sales must be reported. Sales left off the form still go on Form 8949 from the export.
Request the full export from every platform
Ask each exchange for its full transaction history for the return's tax year, in CSV or XLSX, covering trades, deposits, withdrawals, transfers, rewards and fees. A request that works: "Please download the full 2026 transaction history for [platform] in CSV format, with every trade, deposit, withdrawal, transfer, reward and fee." One file per account.
If the platform offers only a tax report, request the transaction history too. A report summarizes sales and can omit transfers and rewards.
Failure mode: the export and the 1099-DA disagree on a sale date. The usual cause is the platform's time zone or a trade that settled near year end. Match on the transaction ID and note the time zone.
Wallets: addresses, first use and transfer hashes
For each self-custody wallet, ask for the public address, the blockchain and the first and last use dates in the year. Never ask for a seed phrase or private key.
The IRS FAQ says a transfer between a taxpayer's own wallets is non-taxable, except for digital assets used to pay transaction services. Ask for the hash of each transfer out and of the matching transfer in. An unmatched send looks like a sale; an unmatched receive looks like income.
Worked example: a client moves 0.8 ETH from Exchange A to a wallet, then sends the same 0.8 ETH to Exchange B the next day. With only the outbound transfer in the file, it looks sold. With both hashes, the preparer records one transfer and keeps the original basis and purchase date.
Cost basis: one record per lot sold
Each disposal needs the asset, acquisition date, quantity, cost, sale date, quantity sold and proceeds. Form 8949 has eight columns: (a) description of property, (b) date acquired, (c) date sold or disposed of, (d) proceeds, (e) cost or other basis, (f) code, (g) amount of adjustment and (h) gain or loss.
Worked example: the client holds 0.3 BTC from one purchase and 0.2 BTC from a later one, and sells 0.4 BTC. If the lot records show 0.3 BTC from the first lot and 0.1 BTC from the second, write one row per lot piece, each with its own acquisition date and basis.
Worked row, with C for the cost of the coin sold and P for its proceeds, for 0.5 ETH bought in 2025 and sold in 2026. Held more than one year, the gain is long-term: box K if the 1099-DA lists the sale with no basis, or box L if no 1099-DA lists it. Column (d) is P, column (e) is C, column (h) is P minus C, and columns (f) and (g) stay blank. Held one year or less, the row is short-term: box H if the 1099-DA lists the sale with no basis, or box I if no 1099-DA lists it. Fees are left out here.
Decision rule: if the export does not tie a sale to a lot, ask for the purchase records and the platform's lot-selection setting. Do not use a year-end price for a sale on a different date.
Staking, mining and forks are income as well as gains
The IRS digital assets page says income from forks, staking and mining is reported on Form 1040, Schedule 1. For a hard fork, the IRS FAQ says ordinary income equals the fair market value when received, and basis equals that amount. The FAQ has no staking question, so the valuation below is practice, not a quoted IRS rule.
Practice that holds up in review: value each reward in U.S. dollars on the date the client received it, from the export or a documented price source, and record the time zone. Do not value a year's rewards at one year-end price.
Worked example: a validator pays 4 SOL on each of three payout dates, with SOL prices p1, p2 and p3 on those dates. Income is 4 times the sum of p1, p2 and p3.
Failure mode: an earn program pays rewards as separate rows labeled as rewards, not trades. A trades-only filter drops them. Total every reward row by date.
Form 1040: the digital asset question has two parts
Form 1040 asks the digital asset question, and the IRS quotes it as: "At any time during the tax year, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?" The taxpayer must answer Yes or No.
Decision rule: answer Yes if the client received any reward, staking payout, mining payment or hard-fork coin, or disposed of any digital asset, including a swap. Cash purchases held untouched mean No to both parts. A missing 1099-DA is not a reason to answer No.
Failure mode: the client says No because no 1099-DA arrived, but the export shows a reward row. Resolve it before filing.
What changes for the 2026 return
For sales effected after 2025 of covered securities, the broker must report basis. Coins bought and sold on the same platform in 2026 should arrive with basis, which the preparer still checks against the lot records.
Coins bought in 2025 stay noncovered, so their 2026 sales still need purchase records, even when the same platform issued the 1099-DA. A coin transferred in from another platform or wallet needs its original acquisition date and basis checked, since the covered-security test looks at where the coin was acquired.
Dates: which tax year each deadline belongs to
The dates here apply to tax year 2025 forms, and they have passed. Recipient statements for 2025 Form 1099-DA were due February 17, 2026. Paper filing with the IRS was due March 2, 2026, and electronic filing was due March 31, 2026. Form 1099-DA cannot go through the FIRE System; it must be e-filed through IRIS.
For tax year 2026, use the 2026 form instructions for any deadline. Do not carry the 2025 dates forward.
Form 1099-B and Form 1099-K: what they cover in crypto
The Form 8949 instructions use the same box letters for Form 1099-B and Form 1099-DA. A short-term line with basis reported goes in box A or G, and a long-term line with basis not reported goes in box E or K.
Form 1099-K does not mention digital asset sales or basis, so it cannot replace the export.
Wash sales: the IRS guidance is silent
The IRS digital asset FAQ does not mention wash sales, so it does not say whether a loss on a coin rebought soon after is disallowed. Do not assume the rule applies to crypto, or that it does not.
Decision rule: for any crypto loss followed by a repurchase of the same coin, the reviewer records the firm's position in writing before filing, and Form 8949 column (g) follows that position.
Keep the records that support each line
The IRS FAQ says taxpayers must keep records sufficient to establish the positions taken on the return, including documentation of fair market value. Keep raw exports as the platform produced them.
Decision rule: each Form 8949 row should trace to one transaction ID in the export. Name each file with the platform, account and tax year, and record the download date.
Send one request list to the client
Send one message listing every Form 1099-DA, Form 1099-B and Form 1099-K received, each exchange and app export, each self-custody wallet address with its blockchain, the transfer hashes, the dated reward and staking statements, and the purchase records for each lot sold.
If the client sends a partial set, reply with only the missing items.