Crypto Tax Anxiety: When Proceeds Get Reported But Cost Basis Doesn’t

Key Insights:

• Crypto tax software should show what an investor paid, what they sold, and what they owe.
• However, the software only returns the proceeds as the final number.
• As such, brokers are reporting 2025 sales proceeds without including cost basis.

This filing season, a crypto user downloads a new standardized crypto tax form for digital assets and expects the full picture in one place. The assumption is simple: it should show what they paid, what they sold for, and what they owe. Instead, the form often delivers only one clean number: proceeds.

That gap matters more than most people realize. Brokers are reporting 2025 sales proceeds without including cost basis, meaning the form can look complete while missing the detail that keeps the math honest.

As a result, a one-click import into crypto tax software can quietly overstate gains, simply because the purchase price never made it into the calculation.

Crypto Tax News: Brokers Report 2025 Proceeds on 1099-DA, While Cost Basis Lags Behind

The early 1099-DA rollout puts proceeds front and center for 2025 activity. However, it leaves out the number that completes the story: cost basis.

In practice, brokers must report gross proceeds for 2025 transactions on 1099-DA. Meanwhile, cost-basis reporting usually isn’t required until the next phase. As a result, the form can show what an investor sold for, but not what they paid.

The form can show the government and the crypto taxpayer exactly what got sold and for how much. However, it often omits the assets’ original cost. That forces the crypto user to reconstruct the cost basis from their own records and transaction history.

That missing piece creates the real headache. A crypto user rarely stays on one app from start to finish. Instead, they buy on one exchange, move coins into a wallet, hop across chains, swap tokens, and later cash out somewhere else when bills hit.

Why Cost Basis Tracking is the Real Crypto Tax Challenge?

The paperwork mostly captures the finish line. However, the real story of the trade happens in the messy middle. Even so, the tax rules still apply. A crypto user must report crypto taxable activity, whether a broker issues a form or not. In addition, they must calculate the cost basis from their own records.

That’s where the stress builds. Crypto tax software pushes people to import a form, trust the numbers, and file fast. As a result, that reminder to verify the basis turns into the biggest pressure point.

This gets even trickier when the cost basis is scattered across several wallets and platforms. In that setup, one clean import rarely tells the full story. As a result, people get confused. In some cases, they pay more than they should.

Some crypto tax professionals have cautioned that missing basis can overstate gains when taxpayers assume an imported form is complete. MarketWatch has also flagged the same risk.

The frustration makes sense. A broker can send proceeds quickly in bulk. However, the hard part doesn’t move with the form. The receipts and the purchase history stay with the taxpayer.

IRS Launches 1099-DA to Standardize Digital Asset Broker Reporting

Form 1099-DA is the IRS’s new pipeline for broker reporting on digital assets. And for many brokers, 2025 marks the first year they plug into it.

The IRS presents the form as a cleaner way to track crypto sales and swaps. In addition, the agency says the system follows final regulations and related guidance designed to make reporting more consistent for taxpayers and for the IRS itself.

The timeline drives the whole crypto tax story. For sales and swaps in 2025, brokers generally report gross proceeds. Meanwhile, the cost-basis box often shows up blank, because many brokers don’t have a solid purchase history to stand on, especially after coins move in from somewhere else.

The IRS instructions spell out the difference between covered and non-covered transactions. In addition, they explain what brokers should do with the cost-basis fields when the basis is unknown or when the rules don’t require it.

Crypto tax form 1099-DA

Then the schedule tightens. Cost-basis reporting becomes more common for sales that happen on or after Jan. 1, 2026.

The rules work best in the simplest case. The IRS instructions indicate the cleanest fit happens when someone buys an asset after 2025, keeps it in the same custodial account, and then sells it from that same place.

However, reality rarely stays that neat. Two people can sell the same token at the same price, yet one receives a clear cost-basis figure while the other sees an empty box.

One person kept the asset in one place. The other moved coins across wallets and platforms. That small difference changes what the form can show. And over time, it starts to shape behavior. When the system works best for a single custodial trail, staying on a single platform is the easiest way to maintain clean paperwork.

Crypto Tax: The Hidden Cost of Self-Custody

Ask 10 crypto users how they tracked cost basis over the past few years, and you’ll hear the same idea in 10 different ways. They all planned to. Then life happened.

They dollar-cost averaged into ETH on one exchange. Next, they withdrew to a self-custody wallet during the not your keys push. After that, they swapped into another token through a decentralized app. Later on, they sent funds to a different exchange and sold.

Exchange B can see the final sale. So it can report the proceeds without much trouble. However, Exchange B often can’t see the full backstory. It may not know when the asset was bought, what it cost, or how many transfers and swaps happened in between.

That’s why the IRS built the 1099-DA rules around covered versus non-covered transactions. This framework is meant to flag when a basis is reliable and when it isn’t.

That reality produces a lot of normal, everyday stories that turn into tax-time puzzles. The trades make sense in real life. The paperwork struggles to follow. Take a common example: a transfer-in sale. A crypto user buys on one platform, moves the coins to a wallet, deposits them at a different exchange, and then sells.

In that setup, the broker only sees the exit. The earlier steps sit outside its records. The 1099-DA framework anticipates this situation. That’s why the instructions separate transactions where the basis is trackable from those where it isn’t.

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