External Reporting发布于 22 分钟前

Crypto Broker Tax Form’s New Challenges Call for Early Action

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Form 1099-DA treated every digital asset the same way in 2025, reporting gross proceeds of crypto sales to the IRS. Large crypto brokers such as Coinbase, Kraken, and Crypto.com all issued the forms for the first time. But Form 1099-DA is changing for the 2026 tax season. This year, the IRS will require digital assets to fall into one of two categories: “covered” and “noncovered.”

Tax professionals need to understand the difference between these categories before they can navigate the filing process for millions of Americans who will receive these forms this year.

Form 1099-DA was introduced last year to streamline and automate the reporting of crypto sales that happened within custodial digital asset brokers. The form reported the price that the crypto was sold for, not the price it was bought for. That process was implemented as a transition to give brokers time to build the infrastructure needed to track basis on a new asset class.

This filing season, there is an added layer to navigate that changes the process significantly. Brokers now must report cost basis, but only for assets that never left their platform and were acquired after Jan. 1, 2026. If a user bought and sold a digital asset entirely within the same exchange account, then the broker will have seen the full transaction and can report the proceeds and the basis. This would be deemed “covered.”

If an asset moves from one exchange to another, into a personal wallet, over to a different platform, or through a decentralized protocol, the broker loses visibility. It therefore doesn’t have the information needed to calculate cost basis — and isn’t required to try. This would be deemed a “noncovered” asset. An asset bought on a cryptocurrency exchange prior to Jan. 1, 2026, would also be considered noncovered.

For a client who buys and sells entirely on one platform, the distinction between covered and noncovered generally won’t come up. But it’s a common practice for crypto users to move their coins between different wallets or exchanges, and that’s where the problem may arise. For the majority of crypto users who transfer between platforms, this year’s 1099-DA might only reveal a small part of their taxable activity.

Noncovered Asset Reporting

Tax professionals and crypto users need to fill in the missing activity. A 1099-DA that is populated with basis figures for some lots and blank fields for others is incomplete.

Many software platforms that automatically import 1099-DA data into a return are likely to misread this gap, so when a noncovered lot has no cost basis reported, it could be treated (incorrectly) as zero. This would mean the full sale price counts as a taxable gain. Another big issue is that systems might skip calculating a gain at all.

A blank field doesn’t mean the taxpayer paid nothing for the asset or that there’s nothing to report. It means the broker wasn’t required to track that information once the asset left its platform. The actual basis still exists; it just has to be reconstructed from the user’s own records rather than pulled from the form.

It’s also not clear how consistently this will be applied across different brokers over time, as the term “broker” is so broad and changes rapidly. Because the DeFi frontend broker rule was repealed in April 2025, non-custodial wallets that allow trading currently aren’t subject to 1099-DA reporting. Taxpayers must still report and pay taxes on trades conducted on such platforms, but they won’t be issued 1099-DAs for their trading activity.

Even the GENIUS Act, which gave stablecoin issuers a federal regulatory framework last year, left tax treatment untouched. Stablecoins are still property in the eyes of the IRS, so every conversion is technically a disposition that may need reporting.

A return with an incomplete data set may trigger a CP2000 underreporter notice, spotting the discrepancies between the figures reported by the broker and what the taxpayer filed.

Taking Action

The IRS is continuing to refine broker reporting, but the timeline for that is uncertain. For now, firms should take precautionary steps before the filing season starts, rather than wait for a mismatch notice to arrive:

Audit clients’ transaction history early. Request full exchange and wallet-level exports for every client with digital asset activity, not just the 1099-DA forms they received. Flag any noncovered lots and make this a built-in, non-negotiable part of your workflow with clients. Compare broker data against client records before filing, and ensure any discrepancies are flagged immediately, while there is still time to resolve them.

Reset client expectations. Some taxpayers might assume this process shifts the reporting burden to the broker. It doesn’t. The taxpayer is still responsible for accurate gain and loss reporting, regardless of what the form captures. This past year, 1099-DAs from some exchanges were also reissued on the actual tax deadline, April 15. You might also want to recommend that clients file an extension so you have more time to help with the filing (although this doesn’t postpone owed taxes).

Review engagement letters and scope. Make sure that clients understand who is responsible for gathering data on assets that aren’t automatically covered by broker reporting. All Form 1099-DA does is standardize the simplest parts of reporting — the hardest parts are left to the users themselves. Firms that start reconciling data now will spend much less time next spring dealing with IRS notices they could have seen coming.

Simplify ongoing reporting moving forward. To ease tax reporting, you may want to recommend that your clients only ever transfer stablecoins such as USDC and USDT directly to and from exchanges. This way, all their more volatile cryptocurrency assets have clear cost basis lines within a single exchange when they sell them. This isn’t always possible, but if it is, it will substantially simplify tax reporting moving forward.

The crypto industry has been like the Wild West in terms of tax regulation, and the 1099-DA represents an important step forward in legitimizing our industry. There may be a bit of pain as we all scramble to figure out how to comply. But, long term, these clear rules will be a catalyst to help crypto grow to be an even larger asset class than it is today.

This article does not necessarily reflect the opinion of Bloomberg Industry Group Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.