Form 1099-DA Is Live: What DeFi, Staking, and NFT Holders Must Do Now
Form 1099-DA is real, it's active for tax year 2025, and it changes the tax conversation for every US crypto holder. But here's what catches people off guard: the form reports what your broker knows, not everything the IRS needs to verify your return. If you've ever moved assets between wallets, earned staking rewards, swapped tokens in a DeFi protocol, or bought an NFT, the gap between what the form shows and what your return requires is almost certainly your responsibility to fill. Understanding that gap is the first step to staying on the right side of the IRS.
Where Form 1099-DA Comes From
The statutory foundation
Form 1099-DA didn't appear out of nowhere. The Infrastructure Investment and Jobs Act (IIJA), enacted by Congress, amended Internal Revenue Code Section 6045 to bring certain digital asset sales and exchanges into the existing broker information-reporting framework. Section 6045 already covered securities and other financial transactions long before crypto existed. The IIJA extended that framework expressly to digital assets, and the US Department of the Treasury and the IRS then issued final regulations and introduced Form 1099-DA to implement it.
For tax year 2025, the starting point is proceeds reporting. Brokers are generally required to report certain digital asset sale and exchange transactions that occurred on or after January 1, 2025. Many holders have already received a form showing the gross proceeds from a sale or exchange. Some brokers are also including basis information, either on the form itself, on a supplementary statement, or through account-level reporting tools. That's useful, but it's not the whole picture.
Why information reporting matters to the IRS
The IRS has long recognised that voluntary tax compliance is higher when income is subject to third-party reporting. Form 1099-DA fits into that logic: it gives the IRS data to compare against what you report on your return. When those numbers don't align, or when the form is there but a corresponding gain or loss isn't, the IRS has a basis to ask questions. That matching process is a core compliance tool, and now it applies to crypto.
The Reconciliation Problem
Proceeds alone don't determine your tax bill
This is the part that trips people up. A Form 1099-DA might show that you received, say, $100,000 from the sale of a digital asset. That number alone tells you nothing about your taxable gain or loss. To get to the right answer, you need your cost basis, the date you acquired the asset, your holding period, any transaction fees, your transfer history, and the records that connect all of those facts together. The form may not contain any of that.
Brokers can only report what they know. If you acquired an asset on one exchange, moved it to a self-custodied wallet, used it in a staking protocol or a DeFi application, bridged it to another network, and then eventually sold it through a different platform, the selling broker knows the sale price. It probably doesn't know your original cost, your acquisition date, or anything that happened in between. That's the reconciliation challenge that Form 1099-DA creates.
Covered versus noncovered assets
Not every Form 1099-DA includes basis information, and understanding why matters. Assets are classified as either covered or noncovered securities for reporting purposes. For covered digital assets, brokers generally must report basis information for sales occurring after 2025. For noncovered assets, basis reporting remains voluntary. That means some forms will show both proceeds and basis, while others will show proceeds only.
Even when basis is reported, its accuracy depends entirely on what the broker knows about the asset's full acquisition history. If the asset was acquired on the same platform, held there continuously, and sold there after the relevant effective date, basis reporting is likely straightforward. But if the asset moved between platforms, came from a self-custody wallet, was received as a staking reward or an airdrop, or was held from an earlier period before the broker had complete records, the reported basis may be incomplete or missing entirely.
Why DeFi, Staking, and NFT Activity Creates Specific Risk
DeFi tax: the traceability problem
DeFi activity is where the gap between broker reporting and a complete tax picture becomes most pronounced. Swapping tokens in a decentralised protocol, providing liquidity, borrowing against collateral, or bridging assets across networks typically happens outside any single platform's record-keeping system. A broker who ultimately processes a sale may have no visibility into what happened on-chain before the asset arrived. Understanding PARITY Act and what it means for staking and DeFi tax in the US is useful context here, because the regulatory treatment of DeFi-sourced income remains a live question in Washington. What's settled is that the IRS expects you to report it correctly regardless of whether a broker form captures it.
From a practical standpoint, DeFi tax means you need on-chain records. Wallet addresses, transaction hashes, timestamps, token amounts, and fair market values at the time of each taxable event are the raw material of a defensible DeFi tax position. If your only record is a proceeds figure on a 1099-DA, you don't have enough.
Crypto staking tax: income first, then disposal
Crypto staking tax involves two separate tax events for most holders. When you receive staking rewards, the IRS treats those rewards as ordinary income at their fair market value on the date you receive them. That income establishes your cost basis in the rewarded tokens. When you later sell or exchange those tokens, any difference between the sale price and that basis is a capital gain or loss.
The problem is that Form 1099-DA covers sale and exchange transactions, not necessarily the income recognition event when rewards are received. Your broker may report the proceeds when you sell staking rewards, but the basis for those rewards, established at the time you received them, may not be on the form at all. You need your own records of when each reward was received, the fair market value at that moment, and the quantity of tokens. Without that, you can't calculate the correct gain or loss when you eventually sell.
NFT tax: each token is its own position
NFT tax follows the same general framework as other digital asset disposals, but the practical record-keeping challenge is significant. Each NFT is a unique asset with its own acquisition cost, acquisition date, and disposal history. If you've minted, purchased, sold, or traded NFTs across multiple marketplaces and wallets, you may receive a Form 1099-DA for any sale proceeds, but the basis for each individual token is something you need to track yourself.
Creator royalties, gas fees paid at minting or transfer, and any income received when an NFT was sold all add layers of complexity. A proceeds-only form tells the IRS you received money. Your records need to show what it cost you, when you got it, and what the net taxable result is.
What You Need to Do Before the Next Filing Cycle
Assess your basis gaps now
The most important question to answer is whether you can connect every Form 1099-DA you receive to a complete acquisition history. That means being able to identify, for each reported transaction, the original cost basis, the date of acquisition, the holding period, any fees paid, and the transfer history if the asset moved between wallets or platforms before the sale.
If assets were acquired before a consistent record-keeping system was in place, transferred from self-custody or an unsupported platform, received through staking, airdrops, DeFi activity, or NFT minting, or held across multiple exchanges over time, there is a meaningful chance that a Form 1099-DA will show proceeds without a matching basis. That gap is normal, but it must be addressed, not ignored.
Don't simply accept broker-reported numbers
Broker-provided basis should be treated as a starting point, not a final answer. If a form reports basis for a transferred asset, but the broker only knows the asset's value at the time it arrived on their platform, that isn't your true cost basis. Using an incorrect basis, even one the broker provided, leads to an incorrect tax result. You remain responsible for the accuracy of your return regardless of what a third party reports.
Similarly, if a form reports proceeds from a sale that you believe is incorrectly characterised, or where the reported amount doesn't match your records, you shouldn't simply copy the number onto your return. Discrepancies need to be understood and, where appropriate, reconciled with documentation that supports your actual position. For a broader view of how 2026 reforms are reshaping US crypto obligations, see our US crypto tax reform overview for 2026.
Build a wallet-by-wallet record-readiness system
The practical approach is to treat your crypto tax position as a wallet-by-wallet and platform-by-platform exercise, not just a form-matching exercise. For each wallet address and each exchange account, you should be able to answer: what came in, when, at what value, what left, when, at what value, and what happened in between. That level of detail is what connects a Form 1099-DA to a defensible return position.
Before the next reporting cycle, consider whether you can identify all assets transferred from self-custody or another platform where the selling broker may lack complete history, whether your staking and DeFi reward records capture fair market values at receipt, and whether your NFT records include minting costs and per-token basis. If any of those are incomplete, now is the time to reconstruct them, not after an IRS inquiry arrives.
Frequently Asked Questions
What does Form 1099-DA actually report?
Form 1099-DA reports certain digital asset sales and exchanges processed by brokers. For tax year 2025, it primarily reports gross proceeds. Some brokers also report cost basis for covered assets, but this is not always complete, particularly where the asset changed hands before arriving at the selling platform.
Is crypto staking tax covered by Form 1099-DA?
Form 1099-DA generally covers sale and exchange transactions, not the income recognition event when staking rewards are received. The income from staking rewards is typically treated as ordinary income when received and should be reported separately. The disposal of those rewards at a later date may generate a Form 1099-DA, but the basis for that calculation depends on records you need to maintain yourself.
How are DeFi rewards taxed in the US?
The IRS treats most DeFi rewards, including liquidity mining income and yield farming proceeds, as ordinary income at their fair market value when received. The exact treatment of specific DeFi transactions, such as token swaps, can also trigger capital gains or losses depending on whether a disposal occurred. Because DeFi activity largely happens off centralised platforms, brokers often can't capture the full picture, making your own on-chain records essential.
What if the basis on my Form 1099-DA is wrong or missing?
You're not required to use an incorrect or incomplete basis just because a broker reported it. You should review the reported figure against your own records and use the correct basis on your return. Where the form shows proceeds only, you'll need to supply the basis yourself, supported by documentation such as exchange statements, wallet transaction histories, or records of fees paid at acquisition.
Does NFT tax work the same way as other crypto disposals?
The general framework is similar: buying, selling, or trading NFTs can trigger capital gains or losses, and creating and selling NFTs may generate ordinary income. Each NFT is treated as a distinct asset with its own basis and holding period. Because NFTs are often minted, purchased, and sold across different platforms and wallets, the record-keeping burden per token can be higher than for fungible assets. A Form 1099-DA may capture sale proceeds, but basis tracking is typically a manual exercise for NFT holders.
Source: Forvis Mazars