1099-DA Explained: Fixing Zero Cost Basis Errors (2026 Tax Year)

By Yi Liu · Updated May 7, 2026 · 8 min read

Answer box

Form 1099-DAis the IRS's new information return for digital-asset brokers, mandatory starting with the 2025 tax year (forms you receive in January 2026). For the first reporting year, brokers report gross proceeds only — cost basis is often blank or $0. That does not mean you owe tax on the full sale amount. You correct it on Form 8949 by entering your actual basis and using adjustment code B. If your trades span multiple exchanges, self-custody wallets, or multiple tax lots, crypto-tax software (Koinly, CoinTracker) is usually worth the $50 to reconstruct basis cleanly.

What is Form 1099-DA?

Form 1099-DA ("Digital Asset Proceeds From Broker Transactions") is a new IRS information return that digital-asset brokers must file starting with the 2025 tax year. It was created by the Infrastructure Investment and Jobs Act of 2021 and finalized in IRS regulations issued in mid-2024. The form is the crypto-industry analogue of the familiar 1099-B used for stocks and ETFs — it reports, for each reportable sale or exchange, the digital asset, acquisition date (if known), sale date, and gross proceeds.

The first wave of 1099-DAs is being sent to customers in January and February 2026 for transactions that occurred during calendar year 2025. If you sold, swapped, or spent crypto through a US-regulated centralized exchange (Coinbase, Kraken, Gemini, Robinhood Crypto, PayPal, Cash App, and similar), you can expect one. The IRS also receives a copy, which means unreported sales are much easier for them to flag than they were in prior years.

Critically, for the first reporting year (2025) brokers are required to report gross proceeds only. Reporting of cost basison the 1099-DA does not become mandatory until the 2026 tax year (forms mailed in January 2027). That one detail is the source of most of the confusion and "zero cost basis" panic you will see discussed on Reddit and X this filing season. See About Form 1099-DA on IRS.gov for the official instructions.

Who gets a 1099-DA?

You receive a 1099-DA if a US-based digital-asset broker handled a reportable disposition of crypto or NFTs on your behalf during 2025. In practice, that means most customers of centralized exchanges: Coinbase, Kraken, Gemini, Robinhood, Binance.US, eToro, Uphold, PayPal, Cash App, and similar regulated platforms. Staking-as-a-service providers and certain crypto payment processors are also brokers under the final regulations.

You will notreceive a 1099-DA for activity on decentralized exchanges (Uniswap, dYdX, etc.), from self-custody wallet-to-wallet transfers, or from on-chain DeFi activity — the Treasury's original DeFi broker rule was rescinded in 2025, so DEXs have no 1099-DA reporting obligation. That does not relieve you of your tax obligation on those trades; it just means the IRS does not get a matching form. If you held crypto all year and did not sell, swap, or spend any of it, you should not get a 1099-DA at all.

Why your cost basis might be $0

The most common 1099-DA shock is seeing a large proceeds figure next to a blank or $0 cost-basis column. If you bought $40,000 of Bitcoin, later sold it for $42,000, and your 1099-DA shows $42,000 in proceeds and $0 basis, you are not on the hook for tax on the full $42,000. You need to supply the missing basis yourself on Form 8949. Here is why that column is often empty:

  • First-year reporting only requires proceeds. For the 2025 tax year, brokers do not have to report basis. Many chose to leave the column blank to avoid reporting potentially wrong numbers.
  • Cross-exchange transfers break the basis chain. If you bought BTC on Kraken, sent it to Coinbase, then sold it on Coinbase, Coinbase did not see the purchase and cannot know your original cost. It reports the sale with $0 basis.
  • Self-custody deposits. Moving crypto from a hardware wallet or MetaMask into an exchange for sale produces the same result — the exchange has proceeds data but no purchase record.
  • Airdrops, forks, and staking rewards. Assets received for free technically have a basis equal to fair-market value on receipt (that FMV should have been reported as ordinary income the year received), but exchanges rarely capture that cleanly.

A $0 cost basis on your 1099-DA is an accounting gap, not a tax bill. The next two sections walk through how to fix it.

How to correct a $0 basis on Form 8949

Form 8949 is where you report each crypto sale and reconcile any difference between what your broker reported and what you actually owe tax on. The totals from 8949 then flow into Schedule D of your Form 1040. When your 1099-DA shows a basis your broker did not report (Box B/E checked, or no basis figure), you handle it like this:

  1. Sort each sale into the right box on 8949. Use Box B for short-term transactions where basis was not reported to the IRS, and Box E for long-term ones. Most 2025 1099-DA sales will fall into Box B or E because basis reporting is not yet mandatory.
  2. Enter your real cost basis in column (e). This is what you actually paid for the asset, including transaction fees. If you bought 0.5 BTC at $80,000 each on Kraken (with a $50 fee) and later sold it on Coinbase, your basis is $40,050 — even though Coinbase reports $0.
  3. If the broker reported $0 (or wrong) basis, use adjustment code B. Code B in column (f) tells the IRS the broker-reported basis is incorrect and that yours is the correct figure. Put the adjustment in column (g) — the difference between what they reported and your actual basis (typically negative, because you are increasing basis).
  4. Pick a basis method and stay consistent. The IRS default is FIFO (first-in, first-out). You can use specific identification (including HIFO) only if you can prove which lot you sold — most software handles this if you import the full transaction history. Once you choose a method for an asset, do not switch mid-year.
  5. Keep your work.Save broker statements, wallet CSVs, and your crypto-tax software's lot report for at least three years (six if you under-report by more than 25%). The IRS does not require you to attach reconstructed-basis records to your return, but they will ask for them if you are audited.

Most consumer crypto-tax tools (Koinly, CoinTracker, CoinLedger, ZenLedger) generate a Form 8949 PDF/CSV that you can either upload to TurboTax / FreeTaxUSA or hand to your CPA. That is usually faster and less error-prone than filling out 8949 by hand once you have more than a dozen trades.

When to hire a CPA vs DIY

Most crypto investors with one or two centralized-exchange accounts can DIY this with $50 of software. Hire a CPA when the trade graph gets messy. The boundary is roughly:

  • DIY-friendly: a single exchange, a few dozen trades, no DeFi, no NFTs, no mining/staking income, no losses you want to harvest cleverly. Import a CSV into crypto-tax software, export 8949, file with TurboTax Premium or FreeTaxUSA.
  • Get a CPA: activity across three or more venues, on-chain DeFi (Uniswap, lending protocols, LP positions, bridges), NFT trading, sizable mining or staking income, foreign exchanges (FBAR/8938 implications), or any year where total proceeds exceed roughly $250K. Wash-sale rules do not currently apply to crypto, but legislation could change that — another reason to get professional eyes on a complex year.
  • Definitely a CPA: you received a CP2000 or audit notice referencing a 1099-DA mismatch, you run a crypto business (exchange operator, validator-as-a-service, NFT issuer), or you are amending prior years.

A crypto-savvy CPA typically charges $500–$2,500 for a personal return, depending on complexity. That is real money, but if you are looking at five-figure tax liability or potential penalties, the math usually works out. Tools are not a substitute for professional advice when the stakes are high — they are a way to walk in with clean books so the CPA bills less.

FAQ

What if my 1099-DA shows $0 cost basis?

It is not a bill for tax on the full proceeds. For the 2025 tax year, brokers are only required to report gross proceeds, so a blank or $0 basis is expected — especially for crypto transferred in from another exchange or self-custody wallet. Supply the correct basis yourself on Form 8949 column (e), and use adjustment code B in column (f) to flag that the broker-reported figure is wrong.

Do I need to file Form 8949 if I got a 1099-DA?

Yes, in almost all cases. Form 8949 is where each sale is itemized and where you reconcile any cost-basis or proceeds difference between the 1099-DA and your records. The totals from 8949 flow into Schedule D, which flows into Form 1040. Tax software does this automatically when you import the 1099-DA, but you still want to verify each line.

Is 1099-DA the same as 1099-B?

Functionally similar, legally separate. 1099-B is for traditional securities (stocks, ETFs, bonds). 1099-DA is the new dedicated form for digital-asset transactions, created so the IRS can match crypto sales the same way it matches stock sales. The reporting columns and the way you carry totals to Form 8949 and Schedule D are nearly identical.

When will brokers start reporting cost basis on 1099-DA?

Cost-basis reporting becomes mandatory for the 2026 tax year — meaning 1099-DA forms received in January 2027 should include both proceeds and basis. For 2025-tax-year forms (received in early 2026), brokers can report basis voluntarily, but most are not, so expect blank columns this filing season.

Will I get a 1099-DA for DeFi or self-custody trades?

No. The Treasury Department's broker rule for decentralized exchanges was rescinded in 2025, so DEXs and on-chain DeFi protocols have no 1099-DA reporting obligation. You are still legally required to report those gains and losses on your own Form 8949 — the IRS just does not get a matching information return for those events.

What is adjustment code B on Form 8949?

Code B tells the IRS that the basis your broker reported is wrong and that the figure in your column (e) is the correct one. You enter it in column (f), and you put the dollar adjustment in column (g) — typically a negative number, because you are increasing basis above what the broker reported. It is the standard way to fix a $0-basis 1099-DA without amending a return.

Can I still use HIFO or specific identification with a 1099-DA?

Yes, if you can document it. The IRS default is FIFO, but you can use specific identification — including a highest-in-first-out preference — when you have records identifying the specific tax lot you sold at the time of the trade. Crypto-tax software handles this automatically when you import the full transaction history. Once you adopt a method for an asset, stay consistent.

What happens if I ignore my 1099-DA?

The IRS gets a copy. If your tax return shows less crypto activity than your 1099-DA reports, you are very likely to get a CP2000 notice proposing additional tax based on the broker's numbers — usually with $0 basis assumed, which inflates the tax. Responding to a CP2000 with reconstructed basis is doable but tedious. It is much easier to file a correct Form 8949 the first time.

Methodology & Sources

This guide is built from the IRS final regulations on digital-asset broker reporting (Treasury Decision finalized 2024), the IRS draft and final instructions for Form 1099-DA, IRS Form 1099-DA instructions, IRS Publication 544 (Sales and Other Dispositions of Assets), and the instructions for Form 8949 and Schedule D. Cost-basis adjustment-code conventions follow the official Form 8949 instructions.

  • IRS — About Form 1099-DA, Digital Asset Proceeds From Broker Transactions: irs.gov/forms-pubs/about-form-1099-da
  • IRS Publication 544 — Sales and Other Dispositions of Assets.
  • IRS — Instructions for Form 8949 (sales and other dispositions of capital assets) and Schedule D.
  • Final regulations on gross-proceeds and basis reporting by brokers for digital-asset transactions, Treasury Department / IRS, 2024.

Related calculators

Crypto gains stack on top of your wages and push you into higher brackets. Pressure-test how a big realized gain changes your take-home pay.

Take-home pay calculator