By Mike Ring | Blockchain Crypto Tax Prep
Your 1099-DA arrived. Maybe it showed up in your Coinbase tax center, maybe your broker mailed it, maybe you didn’t know it existed until a friend panicked on crypto Twitter. Either way, you’re holding a document the IRS also has a copy of — and it’s worth understanding before you hand it off to TurboTax and hope for the best.
Form 1099-DA is the IRS information return for digital asset broker transactions, and tax year 2025 is the first filing year. That means everyone — brokers and taxpayers alike — is figuring this out at the same time. The form looks dense. It isn’t, once you know what each box is actually doing.
This guide walks you through every box that matters, in plain English, with the gotchas called out explicitly. We’ll also do a worked example so you can see how the numbers flow to your return.
Authoritative source: the IRS Instructions for Form 1099-DA are the definitive reference — bookmark it.
The Header: Who Sent This and Why
Before you get to the numbered boxes, the top of the form contains the broker’s name and address, your name and address, your taxpayer identification number (TIN), and the account number. If the TIN is wrong — a transposed digit, an old address, anything — fix it with the broker before you file. A TIN mismatch is how you end up with IRS correspondence you didn’t want.
Box 1a — Code for Digital Asset
Box 1a contains a code identifying the specific type of digital asset involved in the transaction. This is the IRS’s internal DTIF (Digital Token Identification Framework) code — think of it as a standardized ticker that the IRS uses to categorize the asset across all broker submissions. You don’t enter this anywhere on your return. It’s the IRS’s matching layer.
If it reads something unfamiliar, cross-reference it against your transaction history to confirm the broker reported the right asset.
Box 1b — Name of Digital Asset
Box 1b shows the full name of the asset you sold, exchanged, or transferred. “Bitcoin,” “Ethereum,” “USD Coin” — whatever was disposed of. This is the human-readable version of Box 1a.
Gotcha: Brokers use inconsistent naming conventions. If you held wrapped tokens, LP receipt tokens, or anything exotic, verify the name matches what you actually sold. A mislabeled asset is a basis tracking problem waiting to happen.
Box 1c — Number of Units
Box 1c shows the total quantity of the digital asset sold, exchanged, or disposed of. Check this against your own records. Partial-unit sales, dust sweeps, and rounding errors have all shown up wrong in first-year 1099-DAs. If the unit count is off, the proceeds calculation is probably off too.
Boxes 1d and 1e — Date Acquired and Date Sold
Box 1d is the date you originally purchased, mined, or otherwise obtained the digital asset. Box 1e is the date you sold, traded, or otherwise disposed of it.
These two dates determine your holding period — the difference between short-term (held ≤365 days, taxed as ordinary income) and long-term (held >365 days, taxed at preferential capital gains rates). A one-day difference between short and long can mean a 20-percentage-point swing in your tax rate at high income levels.
Gotcha: A taxpayer may receive a Form 1099-DA without cost basis information for assets transferred in from another broker or self-custody wallet. When that happens, Box 1d may be blank or show the transfer date rather than the original acquisition date. If the broker doesn’t know when you bought it, they report what they know. You’re responsible for your actual acquisition date — dig up the original purchase confirmation.
Box 1f — Proceeds
This is the number that causes the most panic, and rightfully so.
Box 1f shows the total gross proceeds from the sale or exchange — the total value you received after selling. It does not show your profit. If you bought 1 ETH for $3,800 and sold it for $3,200, Box 1f still shows $3,200. Proceeds ≠ gain.
Box 3a tells you whether the IRS was given gross proceeds (total sale amount) or net proceeds (after fees). Most brokers report gross. If your broker reports net, they’ve already deducted trading fees from the Box 1f figure. If they report gross, you may be able to add fees to your cost basis on Form 8949 — but don’t double-dip.
The amount shown as proceeds may be subject to tax, but you may not owe taxes on the full amount. You’re only taxed on your capital gains, which is the difference between what you sold the asset for and your cost basis.
The IRS receives the Box 1f number. They will notice if your return doesn’t account for it.
Box 1g — Cost or Other Basis
Here’s where this filing season gets interesting.
Box 1g shows the aggregate cost or other basis of the digital assets sold, exchanged, or otherwise disposed. In theory, it’s what you paid for the asset — your purchase price plus any acquisition fees.
In practice, for the 2025 tax year: brokers are required to report only gross proceeds, not cost basis. Basis reporting is optional in 2025. That means Box 1g may be blank, show $0, or be populated only if your broker voluntarily chose to include it.
A blank Box 1g and a zero in Box 1g are not the same thing under the IRS Form 1099-DA instructions. A blank means the broker didn’t report basis. A zero means the broker reported a basis of $0. If you see $0 and you paid for the asset, that is a broker error — and you should not file your return treating your entire proceeds as gain. Reconstruct your actual cost and document it. See our full breakdown at /insights/1099-da-missing-cost-basis/.
Box 1h — Accrued Market Discount
This box applies when the asset sold was originally issued at a discount (common in traditional fixed-income, less common in crypto). For most crypto investors, Box 1h will be blank. If it isn’t, flag it — you may have tokenized debt instruments or a structured product in your portfolio that requires special handling.
Box 1i — Wash Sale Loss Disallowed
Box 1i covers wash sales loss disallowed. Crypto does not currently have statutory wash sale rules under IRC §1091 — that rule applies to stocks and securities. However, if a broker applies wash sale treatment anyway (some do, to align with anticipated rule changes), any disallowed loss would appear here.
If Box 1i has a number in it, your loss for that transaction has been partially or fully disallowed. The disallowed amount gets added to the basis of the replacement position. Don’t ignore it — it affects your Form 8949 entries.
Box 2 — Check if Basis Reported to IRS
Box 2, if checked, means the basis in Box 1g has been reported to the IRS and either the short-term or the long-term gain or loss box in Box 6 will be checked.
If Box 2 is checked and no adjustment is required, you may be able to report your transaction directly on Schedule D (Form 1040). If Box 2 is unchecked, you’re dealing with noncovered or partially reported data — and you need to supply the basis yourself on Form 8949 with the appropriate adjustment code.
For 2025 returns: your broker will check Box 2 only if cost basis was reported to the IRS, which is not required for tax year 2025. Most boxes 2 will be unchecked this filing season.
Box 3b — Qualified Opportunity Fund
Box 3b, if checked, means your digital asset transaction involves a Qualified Opportunity Fund (QOF). Rare in crypto, but tokenized QOF interests exist. If checked, different deferral rules apply. Talk to a tax professional — this isn’t standard capital gain territory.
Box 4 — Federal Income Tax Withheld
Box 4 shows any backup withholding your broker withheld. This can happen if you don’t provide your TIN to the broker. Backup withholding runs at 24% of gross proceeds. If you see a number here, it flows directly to your Form 1040 as a tax payment — it reduces what you owe (or increases your refund). Don’t leave it off your return.
Box 5 — Check if Loss Is Not Allowed
Box 5 is checked if your reported loss doesn’t qualify due to specific IRS rules. If checked, you cannot claim the loss from this transaction on your return — at least not as reported. This can be triggered by related-party transactions or other disallowance rules. If Box 5 is checked and you’re expecting a loss deduction, stop and get a second set of eyes on it.
Box 6 — Gain or Loss (Short-Term / Long-Term / Ordinary)
Box 6 covers gain or loss. The short-term and long-term boxes pertain to short-term gain or loss and long-term gain or loss. If the “Ordinary” gain or loss box is checked, your digital asset may be subject to special rules.
Short-term: taxed at your marginal ordinary income rate. Long-term: taxed at preferential capital gains rates (0%, 15%, or 20% depending on income). Ordinary: flagged for assets that are treated as income rather than capital gain — most commonly staking rewards, but also certain structured or derivative positions.
If “Ordinary” is checked, don’t automatically assume it’s a capital transaction. It may require an adjustment on Form 8949 or different Schedule treatment entirely.
Box 7 — Only Cash Proceeds
Box 7, if checked, means you only received cash proceeds in the transaction. When you swap one crypto for another, proceeds might technically be “in-kind” (the token you received). Box 7 being checked means the broker confirmed this was a cash-out — the fair market value was settled in fiat or stablecoin equivalent.
Box 9 — Noncovered Security
This is the other box that causes the most confusion — right behind Box 1g.
Box 9, if checked, means the digital asset is a noncovered security.
“Covered” is narrowly defined as digital assets acquired on or after January 1, 2026, and held continuously in the same broker’s account until sale. Any asset acquired before that date, or transferred from an outside wallet or another broker, is considered a “noncovered security,” for which brokers are not required to report basis.
If Box 9 is checked, your broker is telling you: I reported the proceeds, but the basis is your problem. If you don’t see cost basis on your 1099-DA, you’ll need to calculate it yourself — meaning digging into your records or transaction history to figure out how much you paid for the assets you sold.
Noncovered doesn’t mean untaxed. It means underdocumented. The IRS still expects you to report the gain or loss correctly. See our complete solution guide at /1099-da-missing-cost-basis/.
Boxes 12a and 12b — Transfer-In Units and Date
Box 12a shows the number of units transferred in, and Box 12b shows the transfer-in date. These are populated when assets arrived at the broker from an external wallet or another exchange. They help the broker (and you) establish when the asset entered this custody chain.
Gotcha: A populated Box 12b doesn’t tell the IRS when you originally bought the asset — only when it arrived at this broker. Your actual acquisition date (for holding period purposes) may be years earlier. Don’t let the broker’s transfer-in date accidentally reset your long-term clock.
Boxes 14–16 — State Information
Form 1099-DA is not included in the Combined Federal/State Filing program for tax year 2025. Brokers must continue to file Form 1099-DA returns directly with the IRS, and returns will not be transmitted to state agencies through the CF/SF program. State reporting obligations exist separately — check your state’s requirements.
A Worked Example: Reading a Real-Looking 1099-DA
Here’s a simplified but realistic 1099-DA entry. All figures are illustrative.
| Field | Value |
|—|—|
| Box 1a | BTC |
| Box 1b | Bitcoin |
| Box 1c | 0.5 units |
| Box 1d | 03/15/2023 |
| Box 1e | 11/20/2025 |
| Box 1f (Proceeds) | $18,400.00 |
| Box 1g (Cost Basis) | (blank) |
| Box 2 (Basis reported to IRS) | (unchecked) |
| Box 3a | Gross proceeds |
| Box 6 | Long-term |
| Box 9 (Noncovered) | (checked) |
What this tells you:
You sold 0.5 BTC on November 20, 2025. The broker says you received $18,400 in proceeds. Box 9 is checked — this is a noncovered lot, meaning the broker has no basis data for it (consistent with Box 1d showing a 2023 acquisition date, before the 2026 covered-asset cutoff). Box 1g is blank, not $0.
Box 6 shows long-term — you held over a year, which is correct (March 2023 to November 2025 = 2+ years).
What you need to do: Reconstruct your cost basis for that 0.5 BTC from your purchase records. If you paid $15,200 for it in 2023, your actual long-term gain is $3,200 — not $18,400. You report this on Form 8949 Part II, entering $18,400 in proceeds, $15,200 in basis, and using the applicable Form 8949 code (“E” is typical for uncovered basis transactions) in column (f). The $3,200 gain flows to Schedule D.
If you don’t have the 2023 purchase record, that’s a different problem — one we handle regularly. You can start at our /insights/ hub for the full framework, or go straight to /1099-da-missing-cost-basis/ if basis reconstruction is your immediate issue.
FAQ
1. My 1099-DA shows $80,000 in proceeds. Does that mean I owe tax on $80,000?
No. Proceeds are the sale price, not the profit. You owe tax on the gain — proceeds minus your cost basis. If you paid $70,000 for the assets you sold, your taxable gain is $10,000, not $80,000. The key is having documentation of what you paid. Without it, the IRS has only the proceeds number — and that’s the number they’ll match against your return.
2. Why is Box 1g blank on my 1099-DA?
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. A blank Box 1g is normal for this first filing year. It doesn’t mean the broker made an error. It means you are responsible for documenting your basis — which you always were, technically. Now the gap is just more visible.
3. What’s the difference between covered and noncovered?
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. Assets acquired earlier or moved outside continuous custody remain noncovered, with limited or no broker basis reporting. If Box 9 is checked, your lot is noncovered. You supply the basis.
4. I transferred crypto from a hardware wallet to Coinbase and then sold it. What does my 1099-DA show?
It shows the proceeds from the sale in Box 1f. Box 12b will likely show the transfer-in date — when your coins arrived at Coinbase — not when you originally bought them. Box 9 will almost certainly be checked (noncovered), because once custody lineage is broken through transfers, withdrawals, bridging, or other off-platform activity, the asset is treated as noncovered for broker reporting purposes. You’ll need to supply the original acquisition date and cost basis from your own records.
5. What if Box 1g shows $0 but I definitely paid for this asset?
That’s a broker error, not a feature. The 1099-DA instructions direct brokers to enter $0 only if the asset’s basis was actually zero. If you paid for the asset and the broker has reported $0, reconstruct your actual cost from purchase records and document it. Do not file your return using the broker’s $0 — you’d be overstating your gain. Note this distinction: blank ≠ $0. A blank means the broker didn’t report. A $0 means they reported the wrong thing.
6. Does Form 1099-DA cover my DeFi activity?
Generally, no. The form does not cover purely on-chain swaps, smart-contract interactions, AMM trades, staking rewards, or other DeFi-native mechanics when they occur outside a custodial broker environment. If your taxable DeFi activity isn’t on the 1099-DA, it’s still taxable — the IRS just doesn’t have a broker-generated document for it yet. You’re still required to report it. This is exactly the kind of gap that creates problems at filing time.
7. My 1099-DA looks wrong. Can I just correct it on my return?
Yes — with documentation. You report what’s correct on Form 8949, not what the broker reported if you have evidence the broker is wrong. Use the appropriate adjustment codes in column (f) to explain the difference. Keep the documentation. If the IRS runs a matching inquiry, you’ll want a clear paper trail explaining why your reported gain differs from what’s on the 1099-DA. Don’t just ignore a wrong number — reconcile it explicitly.
The Bottom Line
Your 1099-DA is the IRS’s version of your crypto activity. It’s incomplete by design for 2025 — proceeds are required, cost basis largely isn’t. That gap is your responsibility to fill. Read it box by box, cross-reference it against your exchange transaction history, and don’t let a blank Box 1g become an accidental overstatement of gain on your return.
If you have multiple exchanges, transferred assets between wallets, or have noncovered lots with missing cost basis, this gets complicated fast. That’s not a reason to guess — it’s a reason to get it right.
This post is for educational purposes and is not tax advice. Every taxpayer’s situation is different. Consult a qualified tax professional before filing.
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.
