IRS Crypto Tax Form Now Tracks Sales, But May Not Show True Gains

The IRS has sent a new tax form to crypto holders, and it's likely not what you think it does. Form 1099-DA, 'Digital Asset Proceeds From Broker Transactions,' shows the gross proceeds of your crypto sales but doesn't account for cost basis or overall gain or loss. This means the dollar figure on the form is what you sold for, not what you made.

The rules come from the Infrastructure Investment and Jobs Act and final regulations released by Treasury and the IRS. Starting with transactions on or after January 1, 2025, covered US digital asset brokers must issue Form 1099-DA to both the IRS and customers for reportable sales and exchanges.

For those with activity spread across multiple exchanges, self-custody, foreign platforms, NFTs, or DeFi, it's essential to keep accurate records. Reconcile the forms against a complete ledger when they arrive next winter, rather than assuming the form is the whole picture.