New 1099-DA: Exchanges Report Proceeds, Not Cost Basis

Why It Matters

The 1099‑DA gives the IRS a direct line to verify crypto income, shifting the onus of accurate gain calculation onto taxpayers and signaling stricter future reporting obligations for exchanges.

Key Takeaways

• New 1099‑DA form reports crypto sale proceeds only
• Exchanges must send identical copies to IRS and users
• Cost basis omitted this year, complicating gain calculations
• Reporting requirement phased in to ease exchange compliance
• IRS will use 1099‑DA to verify taxpayer crypto income

Summary

The IRS introduced the 1099‑DA form as a dual‑copy reporting mechanism, requiring cryptocurrency exchanges to send one copy to the taxpayer and an identical copy to the agency.

For 2025, the form only mandates reporting of gross proceeds from crypto disposals. Exchanges disclose the dollar value of each sale—e.g., a $6,000 Bitcoin transaction—while omitting the original cost basis, a deliberate phased‑in approach to lessen the reporting burden.

The presenter illustrates the gap: without the $4,000 cost basis, the taxpayer must manually compute the $2,000 gain, and the IRS will use the form to cross‑check whether the individual reported any crypto income at all.

Consequently, taxpayers face added calculation work and risk of mismatched figures, while the IRS gains a new enforcement tool. Future years are expected to require cost‑basis reporting, prompting exchanges to upgrade compliance systems and users to maintain detailed transaction records.