If you filed an extension for your 2025 return, the deadline is October 15. And if you traded on a centralized exchange in 2025, there’s a Form 1099-DA in the mix: the first year exchanges issued it at scale. The IRS got a copy too. For a lot of traders, the number on that form looks alarming, and a lot of people are misreading it.
Before you file, here’s what’s actually going on.
What Form 1099-DA Shows
For 2025 transactions, custodial brokers — centralized exchanges, hosted wallet providers, payment processors — are required to report gross proceeds from your crypto sales and disposals. Gross proceeds means the total amount received from selling or exchanging a digital asset, before subtracting what you paid for it.
Cost basis reporting was not required for 2025 transactions. Some brokers included it voluntarily; many did not. If your 1099-DA has a blank or zero in the cost basis field, that does not mean your basis is zero. It means the broker either didn’t have the data or wasn’t required to provide it.
You are still responsible for calculating your own cost basis, determining your actual gain or loss, and reporting the correct figure on your return.
The Per-Wallet Basis Rule
The IRS eliminated what was sometimes called the “universal” or “global” pooling method. Previously, some taxpayers treated all units of the same token — regardless of which wallet or exchange held them — as a single combined pool for cost basis purposes.
That approach is no longer valid. Cost basis must now be tracked and reported on a per-wallet, per-account basis. If you hold ETH on Coinbase, Kraken, and in a hardware wallet, those are three separate cost basis pools.
For anyone with years of cross-platform trading history, this isn’t just an accounting adjustment — it’s a reconstruction project.
What 1099-DA Doesn’t Cover
This is where a lot of traders have a false sense of security. The following do not appear on Form 1099-DA:
- DeFi activity (swaps on DEXs, liquidity provision, yield farming rewards)
- Transactions through self-custodial wallets
- Cross-platform or wallet-to-wallet transfers
DeFi activity and self-custody transactions remain taxable events. The absence of a 1099-DA for those activities doesn’t change the reporting obligation — it just means the IRS is relying on you to report them yourself.
What People Are Getting Wrong Right Now
Mistaking gross proceeds for taxable gain. The 1099-DA shows what you received. It says nothing about what you made. Your actual gain is proceeds minus basis. If your basis isn’t on the form, you need to supply it.
Treating a blank cost basis as zero. A missing basis field is a data gap, not a tax determination. Filing with zero basis inflates your reported gain and creates an overpayment problem — or, if the IRS catches an inconsistency, an audit problem.
Assuming self-custody means no reporting obligation. Using a non-custodial wallet doesn’t exempt anyone from U.S. tax rules. Those transactions still happened; they’re just not on a form.
Ignoring the reconciliation gap. The IRS can now compare exchange-reported proceeds directly against what you file. If those numbers don’t match — or your return doesn’t include an explanation — a CP2000 notice is the likely outcome.
The Bottom Line
The 1099-DA is a floor, not a ceiling, on what needs to be reported. It captures a portion of on-exchange activity, gross proceeds only, with cost basis that may be incomplete or absent. Everything else — DeFi, self-custody, cross-platform transfers, and your own basis calculations — remains your responsibility.
This is not tax advice, and individual situations vary significantly based on trading history, platforms used, and transaction types. If your 1099-DA numbers don’t match your records — or if you’re not sure what your records even show — that reconciliation needs to happen before you file. We handle exactly this kind of work. If you want to talk through your situation, reach out.
Need help with your crypto taxes? Mike Ring and the BCTP team handle the messy stuff — multi-chain DeFi, 1099-DAs that don’t add up, prior-year amendments. Free consult at cryptotaxprep.io or call 410-216-4632.
This isn’t tax advice. Talk to a professional about your specific situation.
