Digital Asset Tax Reporting — Form 1099-DA Guide

1. IRS Form 1099-DA

The IRS finalized broker reporting rules for digital assets under the Infrastructure Investment and Jobs Act. Crypto exchanges and other brokers must report sales and taxable transactions to both the IRS and to customers. The form covers transactions occurring on or after January 1, 2025.

For the first reporting cycle — completed with the February 17, 2026 recipient-copy deadline for 2025 transactions — the IRS allowed flexibility on cost basis reporting while systems were built out across the industry. Brokers report gross proceeds from digital asset dispositions; cost basis reporting requirements continue to phase in for later years.

Stablecoins get their own regime: qualifying stablecoins are eligible for optional aggregate reporting with a $10,000 annual de minimis. See stablecoins on Form 1099-DA for the definition, the threshold mechanics, and the designated-sale rules.

2. Cost Basis Methods

Permissible methods under IRS guidance:

FIFO (First In, First Out) — default if no method elected. Generally least tax-efficient for assets with appreciation over time.
Specific Identification — requires adequate records tracking individual lots; most tax-efficient for active traders who can selectively identify high-basis lots for disposal.
Average Cost — available for certain account types; simplifies recordkeeping but forfeits lot-level optimization.

3. Staking Income

IRS Revenue Ruling 2023-14: Staking rewards are includable in gross income when the taxpayer receives them, at fair market value at the time of receipt. This applies to proof-of-stake validation rewards. A subsequent sale of the staked asset is a separate taxable event, with the income-recognition value serving as cost basis.

The ruling resolved significant uncertainty about timing of income recognition. The IRS rejected a "creation of new property" argument that would have deferred income recognition until disposition.

4. Key Vocabulary

Broker — defined to include crypto exchanges, hosted wallet providers, and certain DeFi platforms; definition has been subject to regulatory refinement since passage of the Infrastructure Investment and Jobs Act
Digital asset — any digital representation of value recorded on a cryptographically secured distributed ledger; the operative definition under IRC Section 6045
Covered security — digital assets acquired on or after January 1, 2023; basis reporting is required for covered securities
Cost basis — original acquisition cost, inclusive of fees paid, used to calculate gain or loss on disposal
Wash sale — current rules do not apply to crypto assets (unlike equities); active legislative proposals exist to extend wash sale treatment to digital assets; status as of June 2026 remains unresolved

5. Relationship to CARF

US Form 1099-DA collects transaction information that is structurally compatible with OECD CARF requirements, signaling potential future US participation in international crypto tax information exchange. US Treasury published proposed rules in August 2023 explicitly preserving the pathway for this exchange. A formal CARF commitment from the United States remains pending as of June 2026.

6. Key Framework References