Earlier this year, many taxpayers with cryptocurrency accounts received something new: a Form 1099-DA reporting the gross proceeds of their 2025 digital asset sales. For tax year 2026, that form expands. Brokers must now also report cost basis for many digital asset sales, giving the IRS a more complete picture of gains and losses than it has had before. The underlying tax rules have not changed. Digital assets are treated as property, and gains and losses must be reported. What has changed is the information the IRS receives about them.
What Changes for 2026 Sales
Under final regulations issued in 2024 (Treasury Decision 10000), brokers began reporting gross proceeds on Form 1099-DA for digital asset sales on or after January 1, 2025. For sales effected after 2025, the 2026 Form 1099-DA instructions add a second requirement: brokers must report cost basis for digital assets that are covered securities.
A digital asset is a covered security only if it was acquired after 2025 in an account where the broker provided custodial services and was held in that same account until it was sold. Everything else is a noncovered security, including assets acquired before 2026 and assets transferred in from another wallet or platform. Brokers are not required to report basis for noncovered securities, although they may choose to. In practice, a single 2026 form may show basis for some units and not others. The IRS instructions illustrate this with a customer who bought the same asset in 2022 and again in 2026: the 2026 units are covered, and the 2022 units are not.
Moving Assets Has Consequences
Digital assets transferred into a broker from another wallet or exchange are noncovered securities. The receiving broker generally will not report their basis, so your own records must establish what you paid.
The term broker is broader than many people expect. It includes custodial exchanges and trading platforms, operators of digital asset kiosks, and certain processors of digital asset payments. Brokers that do not take possession of customers’ assets, commonly called decentralized or non-custodial brokers, are not covered by the final regulations. Activity through a non-custodial wallet will not generate a Form 1099-DA, but it remains reportable on your return.
A few narrow thresholds apply. Payment processors do not report a customer’s payment sales totaling $600 or less for the year. Under optional reporting methods, brokers need not report designated sales of qualifying stablecoins if aggregate proceeds are $10,000 or less, or sales of specified NFTs if aggregate proceeds are $600 or less. Under Notice 2024-57, brokers also do not yet have to file information returns for certain transactions, including staking, lending, wrapping, and liquidity provider transactions. That exception does not apply to rewards or other compensation earned in those transactions, which remain taxable income.
What Your Return Must Show
Form 1040 asks every filer whether they received or disposed of digital assets during the year. The answer is “Yes” if you sold digital assets, exchanged one digital asset for another, used digital assets to pay for property or services, paid a transfer fee in digital assets, or received digital assets as payment, as a reward, or from mining or staking. Buying digital assets with U.S. dollars, or moving them between wallets you control, is generally not a reportable transaction unless a transfer fee is paid in digital assets.
How a transaction is reported depends on its nature. Sales and exchanges of digital assets held as capital assets go on Form 8949, with short-term transactions (held one year or less) separated from long-term transactions (held more than one year). Income from staking, mining, and similar activities generally goes on Schedule 1. Digital assets received or paid in the course of a trade or business are reported on Schedule C.
For small businesses, accepting digital assets as payment creates two separate events. Receiving the digital asset in exchange for goods or services is income. Later selling or spending that asset is a disposition, which may produce a further gain or loss. A business that accepts digital assets regularly should track both events, because a broker reports only the sale, and only when the asset is held and sold on a reporting platform.
Reporting is required whether or not you receive a Form 1099-DA, and whether or not the form shows basis. Where basis is missing, it is your responsibility to establish it. The IRS expects records showing the date and time of each transaction, the number of units, and the fair market value in U.S. dollars when each asset was acquired and when it was disposed of.
For tax year 2026, the practical steps are the same for most holders: identify which assets were acquired before 2026 or transferred between platforms, confirm that you have purchase records for them, and compare those records against the forms you receive early next year. A tax professional can help reconcile broker forms with your own records before you file.
This article is general information, not tax advice. Consult a qualified professional regarding your specific circumstances.