First 1099-DA forms leave crypto holders rebuilding their own cost basis

In the example Cointelegraph Magazine used, a 2025 form lists $10,000 of proceeds and leaves out the $9,000 of basis needed to calculate the gain ^[1]. The gain is $1,000, so the only figure on the form is ten times the one that gets taxed ^[1]. The IRS says digital asset gains and losses must be reported whether a 1099-DA arrives or not ^[2]. The missing $9,000 has to come from the holder's own records, and those can stretch across several exchanges and wallets over several years ^[3].

Basis goes missing at transfers. Say a holder buys bitcoin on one exchange, moves it to a private wallet, deposits it at a second exchange and sells it there. The second exchange then has a sale and no record of the purchase price ^[4]. "The full transaction history from the day the account opened" is what taxpayers need from exchanges, Herbst said, including fees, deposits, withdrawals and the wallets involved ^[5]. He said one missing piece of that history can change a gain calculated years later on another platform ^[6].

The proceeds figures are also wrong in places. Sharon Yip, founder of Crypto Tax Advisors, said one client traded more than $300,000 of stablecoins on an exchange in 2025. The client then got a 1099-DA showing less than $100,000 of stablecoin proceeds ^[7]. That form caught under a third of the activity and missed more than $200,000 ^[2]. Yip said some forms left out trades and formats differed between exchanges. Some exchanges reported basis on certain trades but not others, although basis reporting was not mandatory for 2025 ^[8]. "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," she said ^[9].

Some forms also came late. Andrew Duca, founder of Awaken Tax, said "a lot of exchanges are still trying to figure it out," and that Kraken "didn't send any forms to users until two weeks before the tax deadline of April 15" ^[10]. That is around April 1 ^[3]. He also cited a Kraken form that showed no transaction information ^[11]. Kraken did not respond to the magazine's request for comment ^[12].

Andrew Gordon, executive director of Digital Asset Tax Action, said most crypto tax software cannot import 1099-DA data. The few programs that can still need manual entry, because brokers did not supply the 2025 forms in a machine-readable format ^[13]. For an active trader, he said, that can mean hundreds of individual entries ^[14]. "The 1099-DAs only reported proceeds in 2025," Gordon said ^[17].

The exchanges produced the proceeds field, some of them imperfectly, and did not ship the machine-readable file Gordon wants alongside every form ^[15]. The hand reconciliation falls on holders and the firms they pay ^[13]. Herbst puts part of that on the holders. "The gap is real," he said, "but it is a record-keeping gap on the taxpayer side as much as a reporting gap on the exchange side" ^[16]. Yip's stablecoin case fits that less well. There, the firm's report and the exchange's form disagreed on proceeds, the one number the exchange did report ^[7].

This could still go differently. Corrected forms could show Yip's gaps were first-year formatting errors. Software vendors could build the import tools Gordon says are missing. Or the forms could stay as issued, with the IRS seeing more than before while the full tax calculation stays with the taxpayer ^[19]. I think the third is closest to how this cycle ends, because on one account the reported number missed more than two-thirds of the stablecoin trades ^[2]. The view is wrong if the discrepancies Yip describes trace back to clients' own missing records, which is what Herbst's framing would predict ^[16].