The 1099-DA $0 Basis Trap: What Crypto Investors and CPAs Need to Know for Tax Year 2025

Service boundary: This guide explains reporting of client-supplied records. Monaco CPA does not monitor portfolios, recommend or execute tax-loss harvesting, select investments, or send reminders.

In This Article

1. Three things to know right now
2. Section 1: Why Tax Year 2025 Is Different
3. Section 2: What Is the $0 Basis Trap on Form 1099-DA and Why Does It Happen?
4. Section 3: Four Checks Before You File
5. Section 4: How Does Form 1099-DA Affect My New Jersey State Tax Return?
6. Section 5: How Does the FASB Fair Value Shift Affect Business Owners on Form 1099-DA?
7. Section 6: CPA Corner
8. What Should I Check Before Filing My Return With a 1099-DA?
9. Quick FAQ
10. Need a CPA to reconcile your 1099-DA?
11. Key Takeaway
12. Ready to File With Confidence?

This article is for informational purposes only and does not constitute tax advice.

A blank cost-basis box means the broker did not report basis; it does not mean your actual basis was $0. Supply supportable basis on Form 8949 from taxpayer records.

Who this applies to: Traded crypto on a centralized exchange in 2025 / Moved assets between exchanges or to/from self-custody / Used stablecoins / Received staking or earn rewards (your tax obligations exist even though brokers are not required to report certain staking-related transaction structures on Form 1099-DA for TY2025 per IRS Notice 2024-57) / Business entities holding crypto on the balance sheet

Note: For TY2025, Form 1099-DA will generally reflect activity on custodial platforms, hosted wallet providers, payment processors, and kiosks, though coverage varies by platform and transaction type. The DeFi broker reporting rule (T.D. 10021) was repealed by Congress via the Congressional Review Act (H.J.Res.25, signed April 10, 2025) and has no legal force. This repeal relates to the non-custodial DeFi "trading front-end services" rule and does not eliminate 1099-DA reporting by custodial brokers for TY2025. Pure on-chain DeFi activity without a reporting broker intermediary generally will not appear on a 1099-DA.

Three things to know right now

1. Form 1099-DA for TY2025 reports gross proceeds (Box 1f, which reflects gross proceeds reduced by allocable transaction fees, commissions, and other allocable costs per Reg. §1.6045-1, and may also reflect the fair market value of non-cash consideration for crypto-to-crypto swaps) for reportable broker-effected dispositions, subject to exceptions and transition carve-outs in IRS guidance including Notice 2024-57. Basis reporting is entirely voluntary for TY2025. The IRS 1099-DA instructions state explicitly that brokers are not required to report basis information for sales effected in 2025. Mandatory basis reporting begins for covered digital assets acquired on or after January 1, 2026. Some brokers may voluntarily report basis for assets acquired and sold on-platform in 2025. If yours does, verify it before relying on it.
2. Blank basis (and occasionally an erroneous $0) is common this year. You must reconstruct your actual cost from your own records or you will end up reporting phantom gains.
3. The IRS Form 8949 instructions direct digital-asset sales and exchanges of capital assets to boxes G/H/I and J/K/L, not boxes C or F. (Compensation, mining, staking, and business receipts are reported elsewhere and never reach Form 8949.) If you received a Form 1099-B for a tokenized asset, see the note in Check 1 below regarding an unresolved routing ambiguity for that specific situation.

Save this article now. If you already have your 1099-DA, use it today. If yours hasn't arrived yet, late and corrected forms are a real possibility in year one.

Tax Year 2025 is the first Form 1099-DA reporting year for broker-effected digital-asset sales. Reconcile gross proceeds, basis status, and transaction records against the final form and instructions. The IRS published Fact Sheet FS-2025-06 on September 25, 2025 to help taxpayers prepare for Form 1099-DA.

Section 1: Why Tax Year 2025 Is Different

The Infrastructure Investment and Jobs Act of 2021 expanded the definition of "broker" to include digital asset exchanges. The IRS used its regulatory authority to implement that mandate beginning with Tax Year 2025. Form 1099-DA is how that gets done.

Here is what most people are missing.

For TY2025, brokers generally report gross proceeds for reportable broker-effected sales of both covered and noncovered digital assets, subject to transaction-specific exceptions and transition relief. Brokers are not required to report basis for 2025 sales, though they may report it voluntarily for noncovered securities. For sales after 2025, mandatory basis reporting applies only to covered digital assets acquired after 2025 through a qualifying acquisition and held in the broker's custody until disposition. Pre-2026 lots, transferred-in lots, and other noncovered securities can continue to show blank basis. Verify the form's covered-status indicator and basis fields against your own records.

Recipient copies of Form 1099-DA were due February 17, 2026, the same furnishing deadline category as Form 1099-B under the IRS general instructions. Notice 2024-56 provides penalty and backup withholding relief for brokers making good-faith efforts to file and furnish correctly for TY2025. Notice 2025-33 extends only the Section 3406 backup-withholding transition relief through calendar year 2026; it does not extend Form 1099-DA furnishing deadlines. Late and corrected forms are a real possibility this first year. Do not wait for corrections to start reconciling.

Section 2: What Is the $0 Basis Trap on Form 1099-DA and Why Does It Happen?

A blank Box 1g means the broker did not report basis; reconstruct it from your own records. A reported $0 is different: the 1099-DA instructions direct brokers to enter zero only when adjusted basis is actually zero. If your records support a nonzero adjusted basis, verify the form and report the supported amount.

The "Applicable checkbox on Form 8949" field on your 1099-DA uses one-letter codes to direct you to the correct Form 8949 box. Here is how to read them for TY2025:

Code Y on the 1099-DA: Per the 1099-DA instructions, Code Y signals that the broker cannot determine whether the recipient should check Box H or Box K because the holding period is unknown. Code Y is a holding-period code, not a basis-status code - basis-not-reported is signaled by Box H or Box K themselves, not by Code Y. You must determine short vs. long-term from your own records and use Box H (short-term) or Box K (long-term) on Form 8949. If you genuinely cannot establish the acquisition date, the conservative practitioner convention is to treat the position as short-term and report in Box H, though the IRS has not issued an explicit default rule on this point.

Note: Both the 2025 Form 8949 instructions (Code X) and the 1099-DA instructions (Code Y) use a code for an unknown or undetermined holding period; the cross-reference is a drafting inconsistency. Follow the code printed on your actual 1099-DA.

Code H or K on the 1099-DA: The broker has indicated your holding period on the form but did not report basis. This may appear if a broker voluntarily reported holding period information and determined it for on-platform transactions. Use the corresponding Form 8949 box and supply your own basis in Column (e).

Code G or J on the 1099-DA: Basis was reported to the IRS. Use the corresponding Form 8949 box and still verify accuracy before filing.

CPA note on Adjustment Code B, Code E, and Box 1f fees

Three points that trip up even experienced preparers.

On Code B: Use it in Form 8949 Column (f) only when a specific basis figure was shown on the 1099-DA but is incorrect - and the entry differs by box. Basis reported to the IRS (Box G/J): keep the reported basis in Column (e) and put the correction in Column (g). Basis shown but not reported to the IRS (Box H/K): enter the correct basis in Column (e) and -0- in Column (g). When basis is simply blank, which is most TY2025 transactions, enter your reconstructed cost in Column (e) and leave Column (f) blank. No adjustment code is needed because you are providing an original figure, not correcting a reported one. Some tax software defaults to Code B or Code O to force a reconciliation on blank-basis 1099-DAs. Follow your software's mapping and verify against the IRS Form 8949 instructions for your specific box.

On Code E: Any time you enter an amount in Form 8949 Column (g), IRS instructions require a corresponding letter code in Column (f), and most e-filing systems will reject a return missing it. If you are adjusting for sell-side transaction costs not already captured in Box 1f, enter Code E in Column (f) and enter the adjustment as a negative number in parentheses in Column (g). You are reducing an artificially high proceeds figure, so the adjustment must decrease the gain. Entering it as a positive number is a common error that inadvertently increases taxable gain.

On Box 1f fees: Brokers are required under Reg. §1.6045-1 to reduce gross proceeds by allocable transaction costs before reporting in Box 1f. Start with Box 1f as your proceeds figure, except for NFT creators and minters where the broker used optional aggregate reporting, in which case proceeds appear in Box 11c and Box 1f is left blank per the 1099-DA instructions. Only make a further adjustment on Form 8949 Column (g) using Code E in Column (f) for transaction costs not already reflected in Box 1f. Adding fees on top of an already-reduced Box 1f number is double counting and one of the more common reconciliation errors I see.

What the trap looks like in real numbers

You sold BTC for $12,000. Your 1099-DA shows $12,000 in proceeds and a blank basis. Your actual cost was $9,000, making your real gain $3,000. If you file without entering that cost, you voluntarily overpay on $9,000 of phantom gain. When you correctly enter your reconstructed $9,000 basis in Column (e), you are filling in information the broker did not provide, not contradicting a reported figure. Keep the supporting records used to reconstruct basis because the IRS may request substantiation through correspondence or examination.

If you only do one thing before filing your 2025 return: rebuild cost basis for every disposition with blank basis and verify any reported $0 against your records, especially for anything transferred in from another wallet or exchange.

Need a CPA to reconcile your 1099-DA against your exchange records before you file? Learn about the 1099-DA Reconciliation Service or use the contact form to request a written scope.

Section 3: Four Checks Before You File

Check 1: Know your Form 8949 box

The IRS Form 8949 instructions are categorical: digital asset sales and exchanges of capital assets do not use Box C or F. Digital asset transactions otherwise reportable on Form 8949 use Box G, H, or I for short-term and Box J, K, or L for long-term. (Digital asset income that is not a capital-asset disposition - compensation, mining or staking income, business receipts - is reported on the appropriate schedule, not on Form 8949.) For most 1099-DA filers, the routing is straightforward:

• Box G / Short-term: 1099-DA received, basis WAS reported
• Box H / Short-term: 1099-DA received, basis NOT reported (widely used in 2025)
• Box I / Short-term: Digital asset transaction not reported on Form 1099-DA or Form 1099-B
• Box J / Long-term: 1099-DA received, basis WAS reported
• Box K / Long-term: 1099-DA received, basis NOT reported (widely used in 2025)
• Box L / Long-term: Digital asset transaction not reported on Form 1099-DA or Form 1099-B

Note for tokenized assets: The 1099-DA instructions explicitly allow brokers to report sales of tokenized assets for cash on either Form 1099-DA or Form 1099-B for TY2025. The 2025 Form 8949 instructions resolve the routing question: the digital asset box instructions expressly cover transactions reported on either Form 1099-B or Form 1099-DA, so a capital-asset digital asset transaction belongs in boxes G/H/I or J/K/L based on its basis-reporting and holding-period facts regardless of which form you received. If you receive a Form 1099-B for a tokenized asset, verify that your tax software routes it into the digital asset boxes and keep the form with your records.

Box H and Box K are the hero checkboxes for most 2025 filers receiving Form 1099-DA, because basis is not being widely reported by brokers this year. Bitcoin has been around since 2009 and many sellers held for years, so do not reflexively default to Box H. Determine your actual holding period from your records first, then route to H (short-term) or K (long-term) accordingly.

CPA shortcut for Code G/J transactions with no adjustments: If a transaction is reported in Box G or J with basis reported to the IRS and you have no adjustments to make, you may be able to aggregate those transactions directly on Schedule D lines 1a (short-term) or 8a (long-term) without listing each one individually on Form 8949. Verify this applies to your specific situation before using the shortcut, as any transaction requiring an adjustment must still go through Form 8949.

Check 2: The transfer trap

A transfer-in is a common basis gap. When you move crypto from a cold wallet, hardware device, or another exchange and later sell it on the receiving platform, that platform typically has no record of your original purchase price or purchase date. Transferred-in assets are noncovered, meaning they are generally not required to have basis reported, and the receiving broker often will not have that information available in any event.

The Date Acquired field on your 1099-DA (Box 1d) may be blank or unreliable for transferred-in lots. The IRS allows it to be blank for several valid reasons: unknown acquisition date, assets acquired on multiple dates, noncovered status, or optional reporting methods. Boxes 12a and 12b flag transfer-in activity specifically. Box 12b may itself be blank when digital assets were transferred in on a variety of dates, per IRS instructions; as a practical matter it may also be blank when the transfer date is simply unknown to the broker or when the asset is noncovered, though those reasons are real-world realities rather than instruction-cited grounds. A blank 12b does not mean no transfer occurred. Treat any line with 12a or 12b activity as high risk and verify everything using your own records.

One important rule that changed for 2025: Rev. Proc. 2024-28 provides a safe harbor for allocating unused basis to specific wallets and accounts as of January 1, 2025. Section 3.10 of the Rev. Proc. defines "as of January 1, 2025" as immediately after the close of the taxpayer's day on December 31, 2024. The per-wallet and per-account basis tracking requirement is now in effect. You can no longer aggregate basis across all wallets and exchanges as one pool. If you held BTC on Coinbase and BTC on a Ledger, those are separate basis pools.

Two allocation methods exist under the safe harbor with different documentation requirements. For the Global Allocation method, the methodology must have been documented in books and records before January 1, 2025. The actual mathematical application of that methodology to remaining units must then be completed by the later of the date and time of the first 2025 transaction in that asset type or the return due date including extensions, per Section 5.02(5)(b) of the Rev. Proc. If you did not document your methodology before January 1, 2025, you cannot elect Global Allocation retroactively.

For the Specific Unit Allocation transition method, Section 5.02(4)(a) of Rev. Proc. 2024-28 requires the allocation documentation before the date and time of the first sale, disposition, or transfer of that asset type on or after January 1, 2025, or by the return due date including extensions, whichever is earlier. Separately, Notice 2025-7 gave eligible taxpayers temporary relief for adequate identification of broker-custodied units disposed of during 2025 by permitting specified book-and-record methods instead of broker communication. Notice 2026-20 extended that separate relief through December 31, 2026. It does not impose or certify a January 1, 2027 broker-system readiness deadline. Unless later guidance extends the relief, the final regulation's broker-communication requirements govern after the relief period.

Check 3: What is and is not on your 1099-DA

Stablecoins: Stablecoin sales and exchanges are taxable dispositions, meaning capital gain or loss, even if the net change is minimal. Brokers may choose whether to use the Alternative Reporting Method for qualifying stablecoins. Under this method, the $10,000 threshold applies specifically to designated stablecoin sales. A designated sale is any sale of a qualifying stablecoin other than an exchange for a non-qualifying digital asset. In practice this means stablecoin-to-fiat and stablecoin-to-stablecoin transactions are designated sales, while stablecoin-to-crypto swaps are non-designated and treated separately. If a broker elects this method and a customer's aggregate gross proceeds from designated stablecoin sales with that broker, after reduction for allocable transaction costs, are at or under $10,000 for the year, those designated stablecoin sales are not required to be reported under the optional method, as clarified in IRS corrections to the 2025 1099-DA instructions. If the aggregate exceeds $10,000, the broker must report those designated sales. The optional method permits aggregate reporting per qualifying stablecoin type on a separate Form 1099-DA for each. Note that the $10,000 threshold is per broker, so a taxpayer with $8,000 in designated stablecoin sales on Coinbase and $8,000 on Kraken may receive no stablecoin 1099-DAs at all even though their combined total is $16,000. If you do receive a stablecoin 1099-DA, check boxes 11a and 11b to see if the aggregate alternative method was used. Either way, your tax obligation on each underlying transaction still exists and Form 8949 still requires the detail.

Staking and earn rewards: Brokers are not required to report certain staking-related transaction structures on Form 1099-DA for TY2025 under Notice 2024-57. Staking rewards themselves are not reported on 1099-DA regardless. Neither changes your tax obligation: per Rev. Rul. 2023-14, staking rewards are taxable income in the year of receipt under current IRS guidance and must be reported from your own records. Depending on how your exchange characterizes the payments, you might receive a Form 1099-MISC, a 1099-INT, or another statement. If no form was issued, the income is still reportable.

Payment processors and de minimis thresholds: For non-stablecoin, non-NFT digital asset transactions through PDAPs, the $600 de minimis threshold is an aggregate annual figure per customer, as clarified in IRS corrections to the 2025 1099-DA instructions. When applying PDAP thresholds, optional method exclusions for stablecoins and specified NFTs are applied first; the remaining non-excluded PDAP sales are then tested against the $600 aggregate threshold. A customer making twenty $50 non-excluded transactions through a PDAP has $1,000 in aggregate sales and all of those transactions become reportable once the threshold is crossed. The de minimis threshold affects only the broker's reporting obligation. Your obligation to report the gain on every taxable disposition, including selling crypto at a kiosk or using crypto to purchase goods or services, remains regardless of whether you receive a form. Note: buying crypto with fiat currency is not a taxable event. It only establishes your cost basis.

Wash-sale reporting note: Standard digital assets generally were treated as property rather than stock or securities for TY2025 Section 1091 analysis. This is reporting education, not a recommendation to sell or repurchase any asset.

A few additional nuances: Form 1099-DA does include a Box 1i for wash sale loss disallowed, which per the 1099-DA instructions applies specifically to digital assets that already qualify as securities under current law, such as tokenized equities, not standard cryptocurrency. Wrapped tokens such as wBTC and liquid staking tokens such as stETH occupy a gray zone where the analysis is fact-specific and unsettled, and the IRS has not issued definitive guidance. If your harvesting strategy involves these assets, discuss the specific facts with your CPA before filing. Additionally, other anti-abuse doctrines including the Economic Substance Doctrine and Step Transaction doctrine can still be applied by the IRS to challenge transactions that lack genuine economic substance beyond tax avoidance.

Scope reminder: Form 1099-DA covers broker-effected activity on reporting brokers, which typically means custodial platforms plus certain other broker categories such as payment processors and kiosks. Coverage varies by platform and transaction type, so expect gaps even within custodial platforms. The DeFi broker reporting rule was repealed by Congress via the Congressional Review Act (H.J.Res.25, signed April 10, 2025) and has no legal force. This repeal relates to the non-custodial DeFi "trading front-end services" rule and does not eliminate 1099-DA reporting by custodial brokers. Pure on-chain DeFi activity without a reporting broker intermediary generally will not appear on 1099-DAs, though activity routed through a reporting broker intermediary could. Your return can legitimately differ from the 1099-DA and every difference needs to be documented.

Check 4: Reconcile against your raw CSV

Download your full transaction history from every exchange you used. Box 1f on your 1099-DA reflects gross proceeds reduced by allocable transaction costs before reporting under Reg. §1.6045-1. Start with Box 1f as your proceeds figure. Exception: for NFT creators and minters where the broker used optional aggregate reporting, proceeds appear in Box 11c rather than Box 1f per the 1099-DA instructions. If transaction costs were not fully reflected in Box 1f, enter Code E in Column (f) and a negative adjustment in parentheses in Column (g) for those additional costs. Do not subtract fees again from a Box 1f number that already reflects them.

For basis: add buy-side fees and transaction costs to your cost basis. Treat sell-side fees as Code E adjustments reducing proceeds in Column (g) if not already captured in Box 1f, not as additions to basis. Your actual executed prices already incorporate bid-ask spreads, so basis should reflect those executed prices without adding spread figures separately on top.

Run a 3-way reconciliation. In the crypto world, unreported basis is sometimes called ghost basis, meaning the cost you actually paid but that does not appear on any form the IRS received:

Source 1, Form 1099-DA: The IRS view of your proceeds from reportable broker-effected sales. Basis absent for most transactions, staking and DeFi excluded, de minimis and optional method carve-outs apply.

Source 2, Exchange CSV or API: The broker's full transaction record. This is where ghost basis most often hides.

Source 3, On-chain and wallet data: Ground truth for self-custody activity. Largely absent from 1099-DA and must be self-reported.

The goal is not to match the form. It is to file an accurate return and document every discrepancy.

Section 4: How Does Form 1099-DA Affect My New Jersey State Tax Return?

For NJ crypto investors, basis reporting errors are not just a federal problem. They compound at the state level in two ways that are easy to miss for preparers who do not regularly work NJ crypto returns.

NJ's graduated rate schedule reaches 10.75% for income over $1 million for both single filers and married filing jointly, per the NJ Division of Taxation published rate schedules for TY2025. For investors at the very top of the combined rate structure, the federal 37% rate plus 3.8% Net Investment Income Tax (applicable above MAGI thresholds) plus 10.75% NJ produces a combined short-term rate exceeding 51%. Even for NJ investors below that top bracket, the combined federal and state exposure on a phantom gain is significant and in all cases exceeds the federal rate alone.

Here is the one most people do not know. In New Jersey, crypto gains and losses fall into the "Net gains from disposition of property" category. You can net gains against losses within that category during the same tax year. However, if the category nets to a loss overall, NJ effectively treats it as zero on your NJ-1040. Per the NJ Division of Taxation, net losses in this category cannot be carried back or carried forward, and they cannot offset income in any other category such as wages, interest, or dividends. The loss simply does not flow through. This is not the same as the loss disappearing within the year: you can and should net all gains and losses within the category first. It is only when that netting produces an overall loss that NJ treats the result as zero.

This is meaningfully different from federal treatment, where the ordinary-income offset is the smaller of the net capital loss or $3,000 ($1,500 if married filing separately), and unused loss carries forward with its short- or long-term character preserved. If your preparer assumes NJ follows federal capital loss rules, you may be significantly miscalculating your state liability.

One additional note relevant for NJ filers and all states: Form 1099-DA is not included in the Combined Federal/State Filing Program for TY2025. This is a nationwide exclusion for the form's inaugural year, confirmed for TY2025 and subject to change in future years. The practical result is that no state revenue department will automatically receive your 1099-DA data through IRS transmission this year. Keep your records and your state return consistent with your federal filing.

Section 5: How Does the FASB Fair Value Shift Affect Business Owners on Form 1099-DA?

If your entity holds cryptocurrency on its balance sheet, Tax Year 2025 brings an accounting change entirely separate from the 1099-DA.

FASB ASU 2023-08 (codified at ASC 350-60) is effective for all entities (public, private, and nonprofit) for fiscal years beginning after December 15, 2024, with early adoption permitted. For calendar-year entities of all types, 2025 is the first mandatory adoption year. The standard applies to crypto assets that meet the ASU's scope criteria: the asset must be fungible, must not provide the holder with enforceable rights or claims on underlying goods, services, or other assets, and must meet the other criteria specified in ASC 350-60-15. NFTs are excluded because they are not fungible. Some wrapped tokens and stablecoins may also fall outside scope because of the enforceable rights criterion; confirm scope with your CPA for each specific holding before assuming the standard applies, as this determination is fact-specific and carries significant accounting consequences. For in-scope assets, the standard replaces the previous indefinite-lived intangible asset model with mandatory fair value accounting. You are no longer just testing for impairment. You are marking crypto holdings to market at each reporting period.

Key transition item: Entities must record a cumulative-effect adjustment to opening retained earnings as of the adoption date, per the ASC 350-60 transition guidance. This is a material accounting change that requires documentation regardless of whether any crypto was sold during the year. Consult your GAAP advisor and review the FASB project summary for ASU 2023-08 for the full transition requirements applicable to your entity.

Your 1099-DA covers dispositions. The fair value measurements and disclosures required under ASC 350-60 cover the holdings you still own at year-end. Both may affect external GAAP reporting in 2025; consult a qualified GAAP adviser because Monaco CPA does not provide external financial-reporting or CFO services.

Section 6: CPA Corner

For CPAs reviewing 2025 crypto returns, here is what to request upfront to avoid surprises mid-return:

• Exchange CSVs from every platform used in 2025
• Transfer history including wallet addresses and transfer dates
• Prior-year cost basis method election, FIFO or Specific ID, per wallet and per account
• Fee and transaction cost records, with clarity on buy-side costs (added to basis) vs. sell-side costs (negative Code E adjustment to proceeds), and confirmation that no costs already reflected in Box 1f are being double counted
• Rev. Proc. 2024-28 safe harbor allocation documentation: confirm which method was elected; for Global Allocation, confirm the methodology was documented in books and records before January 1, 2025 (per Section 3.10, defined as immediately after close of December 31, 2024) and that the mathematical allocation was completed by the later of the date and time of the first 2025 transaction in each asset type or the return due date per Section 5.02(5)(b); for Specific Unit Allocation, confirm the timestamp required by Section 5.02(4)(a). Separately, Notice 2025-7 as extended by Notice 2026-20 permits identification of eligible broker-custodied units sold, disposed of, or transferred through December 31, 2026 either in the taxpayer's books and records no later than the transaction time or through a sufficiently specific standing order recorded before the transaction, without broker confirmation
• Any 1099-MISC, 1099-INT, or other statements for staking, earn, or referral rewards; note Rev. Rul. 2023-14 as the governing authority on staking VALIDATION rewards. Exchange earn/lending interest and referral rewards are outside that ruling's facts - they are analyzed under general gross-income and accounting-method principles (§61/§451) and are generally treated as ordinary income when received or credited, as a practitioner position
• Documentation of any completed loss transactions, especially wrapped-token or liquid-staking-token transactions whose treatment can be fact-specific
• Whether any digital assets were reported on Form 1099-B rather than Form 1099-DA, to flag the unresolved routing ambiguity for tokenized assets
• For business clients: year-end fair value measurements for in-scope crypto holdings per ASC 350-60 (mandatory for all calendar-year entities in 2025), with scope confirmation for each holding type including NFTs, wrapped tokens, and stablecoins, and documentation of the cumulative-effect adjustment to opening retained earnings

One additional note relevant for all states: Form 1099-DA is not part of the Combined Federal/State Filing Program for TY2025. This is a nationwide exclusion. Do not assume any state revenue department received the same data the IRS did. This matters especially for NJ filers given the state's distinct capital loss treatment.

What Should I Check Before Filing My Return With a 1099-DA?

• Check the "Applicable checkbox on Form 8949" field on your 1099-DA: per the 1099-DA instructions, Code Y signals that the broker could not determine your holding period, so it could not pick Box H vs. Box K (it is a holding-period code, not a basis-status code); determine short vs. long-term from your own records and use Box H or Box K; treating an undocumented position as short-term is practitioner convention, not an explicit IRS rule; note that the 2025 Form 8949 instructions reference Code X in certain contexts for unknown holding period. Follow the code printed on your actual 1099-DA
• Use G/H/I or J/K/L for all digital asset transactions; if you received a Form 1099-B for a tokenized asset, note the unresolved routing ambiguity, verify your software's handling, and document your position; Code G/J transactions with no adjustments may be aggregated directly on Schedule D lines 1a or 8a without listing each on Form 8949
• When basis is blank or missing (Box H or K), enter reconstructed cost in Column (e) only. You are filling in information the broker did not provide, not contradicting a reported figure; use Adjustment Code B in Column (f) only when a specific basis figure was reported but is incorrect; enter Code E in Column (f) with a negative amount in parentheses in Column (g) when adjusting for uncaptured sell-side costs; keep documentation to respond to any IRS substantiation request
• If you see $0 in Box 1g and your records support a nonzero adjusted basis, treat it as a likely broker error: the 1099-DA instructions direct brokers to enter $0 only if the asset's adjusted basis is actually zero. Substantiate your adjusted basis and document it
• Verify Date Acquired for all transferred-in assets from original purchase records; Box 1d and Box 12b may be blank when transfers happened on multiple dates per IRS instructions; as a practical matter blank 12b can also result from the transfer date being unknown to the broker or the asset being noncovered; a blank 12b does not mean no transfer occurred
• Flag Boxes 12a and 12b on 1099-DA, these indicate transfer-in activity and are high risk for holding period errors
• Confirm per-wallet and per-account basis tracking (required under Treas. Reg. §1.1012-1(j)); under the Rev. Proc. 2024-28 transition safe harbor, Global Allocation methodology must have been documented in books and records before January 1, 2025 (defined as immediately after close of December 31, 2024 per Section 3.10), with mathematical allocation completed by the later of the first transaction date and time or return due date per Section 5.02(5)(b); Specific Unit Allocation documentation must satisfy Section 5.02(4)(a). Separately, Notice 2025-7 as extended by Notice 2026-20 permits identification of eligible broker-custodied units sold, disposed of, or transferred through December 31, 2026 either in your books and records no later than the transaction time or through a sufficiently specific standing order recorded before the transaction, without broker confirmation
• If you receive a stablecoin 1099-DA, check boxes 11a and 11b to see if the aggregate alternative method was used; if no stablecoin 1099-DA was issued, designated stablecoin sales may not have been required to be reported under the optional method, but your reporting obligations remain
• When applying PDAP de minimis thresholds, optional method exclusions for stablecoins and specified NFTs are applied first; remaining non-excluded PDAP sales are then tested against the $600 aggregate annual threshold; verify all transactions below thresholds are still captured in your own records
• For NFT creators and minters: if the broker used optional aggregate reporting, proceeds appear in Box 11c rather than Box 1f; do not look for proceeds in Box 1f for these transactions
• Locate staking and earn income on 1099-MISC, 1099-INT, or other statements, not on 1099-DA; Rev. Rul. 2023-14 governs staking VALIDATION rewards, while exchange earn/lending interest is analyzed under general gross-income and accounting-method principles (§61/§451) and is generally treated as ordinary income when received or credited, as a practitioner position
• Add buy-side fees to basis; enter sell-side fees not already in Box 1f as a negative Code E adjustment in Column (g); do not double count
• Run the 3-way reconciliation: 1099-DA vs. exchange CSV vs. on-chain data
• NJ filers: net gains and losses within the disposition category for the year; if the net result is a loss, NJ treats it as zero with no carryforward and no offset against other income; the CF/SF exclusion is nationwide so no state automatically received your 1099-DA data
• Business owners: confirm ASU 2023-08 (ASC 350-60) scope for each holding type including NFTs, wrapped tokens, and stablecoins (mandatory for all calendar-year entities in 2025); confirm fair value measurements and disclosures under ASC 350-60 are prepared, including the cumulative-effect adjustment to opening retained earnings
• Watch for late or corrected 1099-DA; Notice 2024-56 provides first-year penalty relief for good-faith filing efforts, and Notice 2025-33 extends only Section 3406 backup-withholding transition relief through 2026, not Form 1099-DA furnishing deadlines

Quick FAQ

If my 1099-DA shows blank or $0 basis, do I just match it?

No. A blank basis on your 1099-DA means the broker did not provide that information. It is not a figure reported to the IRS that you need to match. When you enter your substantiated adjusted basis in Column (e) of Form 8949 using Box H or K, you are filling in information the broker did not provide, not contradicting a reported figure. Keep solid documentation. The IRS may request substantiation through correspondence or examination, and your records are your defense. If you see $0 in Box 1g and your records support a nonzero adjusted basis, treat it as a likely broker error - the instructions direct brokers to enter $0 only when adjusted basis is genuinely zero. Substantiate your adjusted basis regardless.

Are stablecoin transactions taxable?

Yes. Exchanging or selling a stablecoin is a taxable disposition regardless of the net change. If your broker used the optional alternative reporting method, those designated stablecoin sales are not required to be reported when aggregate proceeds stay at or under $10,000 with that broker for the year. Your reporting obligation still exists regardless.

Do transfers between my own wallets trigger a taxable event?

No, a transfer is not a disposition. But it creates basis and holding period risk when records are incomplete. Document every transfer with the original purchase price and date.

What if I did not receive a 1099-DA?

Your transactions are still taxable and reportable. Use Box I for short-term or Box L for long-term on Form 8949 for digital asset transactions not reported on any information return, and keep your exchange CSV as documentation.

Do wash-sale rules apply to crypto for TY2025?

For TY2025, Section 1091 generally did not apply to standard digital assets treated as property. The treatment of wrapped or liquid-staking tokens can be fact-specific. This is education only; Monaco CPA does not recommend or execute harvesting transactions.

Will my staking or DeFi activity appear on my 1099-DA?

No. The DeFi broker reporting rule (T.D. 10021) was repealed by Congress via the Congressional Review Act, signed April 10, 2025, and has no legal force. This repeal relates to the non-custodial DeFi "trading front-end services" rule and does not eliminate 1099-DA reporting by custodial brokers. Pure on-chain DeFi activity without a reporting broker intermediary generally will not appear on 1099-DAs. Brokers are not required to report certain staking-related transaction structures on Form 1099-DA for TY2025 under Notice 2024-57, and staking rewards are not reported on 1099-DA regardless. Your tax obligations on all of this income are not deferred under current IRS guidance. Report based on your own records.

Need a CPA to reconcile your 1099-DA?

The IRS now has standardized third-party proceeds reporting for digital assets at a scale it has never had before. The margin for error is smaller than it has ever been.

Need a CPA to reconcile your 1099-DA against your exchange records before you file? Learn about the 1099-DA Reconciliation Service or use the contact form to request a written scope. Save this article, you will want it when your forms arrive.

Sources: IRS Instructions for Form 1099-DA (2025) and Corrections | IRS Instructions for Form 8949 (2025) | IRS Fact Sheet FS-2025-06 | Rev. Proc. 2024-28 | Notice 2024-56 | Notice 2024-57 | Notice 2025-7 | Notice 2025-33 | Rev. Rul. 2023-14 | FASB ASU 2023-08 (ASC 350-60) | NJ Division of Taxation, NJ-1040 Instructions and Rate Schedules | H.J.Res.25 / Public Law 119-5 (DeFi rule repeal) | S. 2207, 119th Congress

Informational only, not tax advice.

Gregory Monaco, CPA | New Jersey CPA license | New Jersey CPA firm registration | 1099-DA reconciliation information | Full-Service CPA: monacocpa.cpa (opens in a new tab)

Key Takeaway

Form 1099-DA is being issued for the first time for Tax Year 2025, and the biggest trap is blank or $0 cost basis. Brokers are not required to report basis this year, which means every taxpayer must reconstruct their own cost basis from personal records or risk the IRS treating their entire proceeds as gain. Reconcile your 1099-DA against your exchange CSV, reconstruct basis for every disposition, and route transactions to the correct Form 8949 boxes (G/H/I for short-term, J/K/L for long-term). If you are unsure, have your 1099-DA professionally reviewed before you file.

Prediction-market records: Digital-asset information returns may not explain event-contract activity or establish its classification. Reconcile the actual wallet and platform records, and keep a records-first approach without inferring a filing position.

Related reading: Your First Form 1099-DA | How to Fix Cost Basis Errors | 5 Crypto Tax Events Your 1099-DA Won't Report | Crypto Cost Basis Methods | How NJ Taxes Crypto | Crypto tax services

Frequently Asked Questions

Ready to File With Confidence?

Tax rules change frequently. Use the contact form to request a written scope; submitting it does not promise a call, engagement, or outcome. Greg Monaco is a NJ-licensed CPA and the firm's sole practitioner.

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