The first United States tax filing season under the IRS’s new digital asset broker reporting rules is turning into a headache for crypto investors, as exchanges deliver 1099-DA forms that show how much investors sold but not how much they originally paid.
For 2025, brokers were generally required to report gross proceeds from certain digital asset sales, but not the cost basis. That means the tax agency can now see every reported sale, while the burden of calculating the actual gain or loss still falls entirely on the taxpayer. For active traders, the gap between what the forms show and what was actually earned can be enormous.
“For an active trader, that number can be many times their real gain, because each sale is counted at full value with no cost against it,” Chris Herbst, managing director of CountDeFi tax reporting, told Cointelegraph Magazine.
## Survey shows widespread confusion
A survey of 1,000 US crypto investors conducted in August by Awaken Tax found that 21% of respondents who had filed, or planned to file, a tax extension were still waiting for information they needed from an exchange or crypto platform. A further one in five said their 1099-DA was either incomplete or they were not sure whether it accurately reflected their transactions.
The timing adds pressure. Taxpayers who filed for an extension have until October 15 to submit their 2025 returns, and many are discovering the reconciliation problem only now.
Tax professionals say they are already seeing discrepancies when clients try to match the new forms against their own transaction histories. Sharon Yip, founder of Crypto Tax Advisors, said her firm found 1099-DAs that did not include all of a client’s 2025 trades, while different exchanges used different formats for their customer statements.
Some exchanges even reported cost basis on certain trades voluntarily, even though basis reporting was not mandatory for 2025, making the forms harder, not easier, to interpret.
“It’s very confusing for recipients to understand how to reconcile their 1099-DAs when compared to the crypto tax report they should use to file their tax return,” Yip said.
## The stablecoin blind spot
The discrepancies can be substantial. Yip cited the example of a client with more than 300,000 USD in stablecoin trades on a single exchange during 2025, whose 1099-DA showed less than 100,000 USD in total stablecoin proceeds.
Delivery timing has been another problem. Andrew Duca, founder of Awaken Tax, said many customers received their forms late in the filing season, pointing to exchanges like Kraken, which he said did not send any 1099-DA forms to users until roughly two weeks before the April 15 deadline. Duca also cited an example of a Kraken form from that period showing no reported transaction information at all. Kraken did not respond to a request for comment.
## Records remain the taxpayer’s job
The IRS has been clear that the new forms were never intended to replace personal record keeping. Taxpayers must report digital asset income and gains or losses whether or not they receive a 1099-DA. Where basis is not reported, they should use their own records, which gets complicated quickly when assets move between platforms: buy on one exchange, withdraw to a self-custody wallet, deposit to another exchange and sell, and the paper trail fragments across years of statements.
“The gap is real, but it’s a record-keeping gap on the taxpayer side as much as a reporting gap on the exchange side,” Herbst noted.
The situation puts the new rules in sharp relief just as Congress debates a broader crypto tax overhaul. The House Ways and Means Committee recently advanced the Digital Asset Tax Certainty Act in a 38-5 vote, and separate Chainalysis research estimated 457 billion USD in taxable crypto activity last year, most of it invisible to the international CARF reporting standard.
For now, advisers say the safest path is to treat the 1099-DA as a starting point rather than a source of truth: gather complete transaction histories from every exchange and wallet used, reconcile against the forms, and document every discrepancy before the October 15 extension deadline.
Cost basis reporting becomes mandatory for brokers starting with tax year 2026, which should eventually close the gap that is causing so much friction this season. Until then, investors filing their first returns under the new regime are learning that more reporting does not automatically mean less work.
Market snapshot at the time of writing (Sept. 25, 21:00 UTC): Bitcoin traded near 83,851 USD, down 0.56% in 24 hours, Ethereum held 2,684 USD, and Solana changed hands near 121.63 USD, up 4.17% on the day, according to CoinGecko data.
300k of stablecoin trades and the 1099-DA showed under 100k. how is anyone supposed to trust these forms enough to actually file off them
same, my form missed half the stablecoin pairs entirely. exporting the csv and doing it by hand because the 1099 is unusable as is
csv by hand is the only sane path and even then my 1099-DA totals disagree with the exchange history export by a few thousand. no idea which number the irs matching engine actually sees
classic irs move, they see every sale but make YOU prove the basis. oct 15 extension filers are about to have a very bad week
The part about some exchanges voluntarily reporting basis while others dont is what really bugs me. Same rules, five different form formats.
^ exactly. spent a full weekend reconciling mine in a spreadsheet, never again. 2026 basis reporting cant come soon enough tbh
Priyam V. five formats is generous, my three exchanges each defaulted to a different lot method. reconciling them is the actual punishment this season
Counting every sale at full value with zero cost basis is how you convince half the country they owe 10x what they actually do. Been doing this by hand since 2019, at least the exchange records exist now.
exactly, i had one 1099-DA that was missing half my transfers. the matching is gonna be a mess for years
hand filing since 2019 is heroic. the honest fix is brokers tracking basis across internal transfers but half of them still treat moving coins between your own wallets as a sale event
filed an extension in april specifically to dodge this mess and now im the one holding the bag anyway lol
The Awaken Tax survey says 21% of extension filers were still waiting on info from their exchange. How is the IRS supposed to match numbers the brokers themselves have not delivered yet?
21 percent still waiting on exchange info two weeks before the deadline basically guarantees a wave of amended returns next year. the matching program was not ready for its own launch
oct15_zombie the amended return wave is guaranteed. never file off a gross proceeds form, take the extension and build the basis file yourself
herbst really said the quiet part, gross proceeds can be many times your real gain. active traders are cooked this season
the herbst line about gross proceeds running many times your real gain should be on a poster. one active trader i know got a 1099 showing 6x their actual profit