Crypto taxpayers hit snags as IRS sees proceeds but not cost basis

Crypto investors face a bumpy first filing season under new IRS rules

US crypto investors are running into problems in the first tax filing season under new IRS reporting rules. Brokers are now required to report the gross proceeds from certain digital asset sales, but the forms generally do not include cost basis — the amount an investor originally paid for the asset. That leaves taxpayers to work out their own gains and losses.

A survey of 1,000 US crypto investors carried out in August by Awaken Tax found that 21% of those who had filed, or planned to file an extension, were still waiting for information they needed from an exchange or crypto platform. Another one in five said their 1099-DA — the form brokers use to report certain digital asset sales — was either incomplete, or they were not sure it accurately reflected their transactions.

Taxpayers who filed for an extension have until Oct. 15 to submit. The survey and the experiences of tax professionals were reported by Cointelegraph Magazine on Sept. 25, 2026.

Key numbers from the 2025 filing season

• For 2025, brokers were generally required to report proceeds — how much an asset sold for — but not cost basis.
• 21% of surveyed investors who had filed or planned an extension were still waiting on information from an exchange or platform.
• One in five said their 1099-DA was incomplete or of uncertain accuracy.
• From 2026, brokers must generally report cost basis for covered digital assets, though assets transferred in from another exchange or wallet can still fall outside those requirements.

Why the missing cost basis is a problem

Cost basis is the amount a taxpayer originally paid for an asset. It is needed to work out whether a sale produced a gain or a loss.

For a simple trade, the maths is easy. If someone bought Bitcoin for $9,000 and sold it for $10,000, the gain is $1,000. But a 2025 form could show the $10,000 in proceeds without the $9,000 basis, leaving the taxpayer to fill in the missing part.

Chris Herbst, managing director of CountDeFi tax reporting, told the magazine that for an active trader the reported figure can be far above the real gain. He said each sale is counted at full value with no cost against it.

Herbst added that the gap is real, but described it as a record-keeping gap on the taxpayer side as much as a reporting gap on the exchange side.

Accountants report missing trades and mismatched figures

Sharon Yip, founder of Crypto Tax Advisors, said her firm has found differences between the 1099-DAs clients received and the crypto tax reports it prepared for them. According to Yip, some forms did not include all the trades clients made during 2025, and exchanges used different formats for customer statements. She said some exchanges reported cost basis on certain trades but not others, even though reporting basis was not mandatory for 2025.

Yip said it is very confusing for recipients to understand how to reconcile their 1099-DAs with the crypto tax report they should use to file their tax return.

She gave one example involving stablecoins, which are crypto tokens designed to hold a steady value. A client had more than $300,000 in stablecoin trades on an exchange in 2025, but the exchange's 1099-DA showed less than $100,000 in total stablecoin proceeds.

Some forms arrived late, or with no transaction data

Andrew Duca, founder of Awaken Tax, said the firm saw customers receiving 1099-DAs relatively late in the filing season. He said that because the regulation is new, a lot of exchanges are still trying to figure it out, and pointed to exchanges such as Kraken that did not send any forms to users until two weeks before the April 15 tax deadline. Duca also cited a Kraken 1099-DA from around the same period that showed no reported transaction information.

Kraken did not respond to the magazine's request for comment, so the exchange's position on those accounts is not included in the report.

What the IRS expects taxpayers to do

The forms were not intended to replace taxpayers' own records. The IRS says taxpayers must report digital asset income and gains or losses whether or not they receive a 1099-DA. Where basis is not reported, taxpayers should use their own records to complete their return — something that gets harder when assets move between platforms.

Someone might buy Bitcoin on one exchange, move it to a private wallet, send it to a second exchange and sell it there. The second exchange does not have the information showing what was originally paid.

Herbst said taxpayers need the full transaction history from the day an account opened, including trades, fees, deposits, withdrawals and transaction identifiers such as the wallets involved. He said basis follows the asset as it moves between platforms, which means one missing piece of history can affect a gain calculated years later on another exchange.

Tax software and manual data entry

Andrew Gordon, executive director of Digital Asset Tax Action, said taxpayers are constantly struggling to reconcile 1099-DAs with their own records during the 2025 filing season. He said most crypto tax software lacks tools to import and reconcile 1099-DA information, and that the few programs that do still require manual entry because brokers did not provide the 2025 forms in a machine-readable format.

For active traders, Gordon said, that manual work can mean hundreds of individual entries. He argued that brokers should provide a machine-readable file alongside every 1099-DA, and that exchanges should keep complete transaction histories including acquisition dates, amounts paid, fees and transfers.

Gordon said 1099-DAs only reported proceeds in 2025, which gives the IRS visibility it did not previously have, and added: "Visibility without basis produces the zero-basis problem."

Duca advised taxpayers not to copy numbers from a 1099-DA straight onto a return. He said the IRS expects a return to reflect actual gains and losses, not necessarily what is printed on a form the exchange may have worked out incorrectly.

What is confirmed

• For 2025, brokers were generally required to report proceeds from certain digital asset sales, but not cost basis.
• An Awaken Tax survey of 1,000 US crypto investors in August found that 21% of those who had filed or planned an extension were still waiting on information from an exchange or platform, and one in five said their 1099-DA was incomplete or of uncertain accuracy.
• Taxpayers who filed an extension have until Oct. 15 to submit.
• The IRS says digital asset income and gains or losses must be reported whether or not a 1099-DA is received.
• From 2026, brokers must generally report cost basis for covered digital assets.

What is still unclear

• Kraken did not respond to the magazine's request for comment, so its account of the late or blank 1099-DA examples is not available.
• The survey did not establish why forms were incomplete in every case, and the discrepancies described by tax professionals were reported as examples from their own clients rather than as a complete picture.
• It is not yet clear how much of the record-keeping burden will ease from 2026, because assets transferred to a broker from another exchange or wallet can still fall outside cost basis reporting requirements.

Why this matters for crypto taxpayers

The new reporting gives the IRS more visibility into crypto sales than before. But the amount a taxpayer owes depends on the difference between proceeds and cost basis, and for 2025 that second figure is often not on the form.

As a result, investors still need their own records — including details that may stretch across multiple exchanges, wallets, trades and years — to calculate what they owe.

Cost basis reporting starts in 2026

From 2026, brokers must generally report cost basis for covered digital assets. That should give taxpayers more of the information needed to calculate gains and losses. However, assets transferred to a broker from another exchange or wallet can still fall outside those requirements, so records remain important.

Sources

• Cointelegraph