What is the 1099-DA?
Form 1099-DA (Digital Assets) is the new IRS reporting form for crypto transactions. Starting in 2027, exchanges and brokers will report your crypto sales directly to the IRS, similar to how stock brokers report on 1099-B.
Each 1099-DA will include: the asset sold, date of sale, proceeds, and (for covered assets) cost basis.
What changes for you?
Before 2027 (now)
Exchanges don't report cost basis to the IRS
You self-report everything on Form 8949
Nobody checks your math unless you get audited
After 2027
Exchanges report your sales AND cost basis to the IRS
The IRS can compare your return against the 1099-DA
Mismatches may trigger automated notices
The problem: the exchange's data will probably be wrong
For anyone who:
Transferred crypto between exchanges (the receiving exchange doesn't know your cost basis)
Used a different method than FIFO in 2025-2026 (the exchange used FIFO, your books used HIFO)
Traded on DeFi protocols (no exchange reporting at all)
The 1099-DA will show numbers that don't match your actual tax situation. This isn't an error on your part. It's a structural limitation of the system.
What to do about it
Don't try to match the 1099-DA. Instead:
<strong class="text-[#e4e1ed]">Report the 1099-DA numbers in columns (d) and (e)</strong> of Form 8949
<strong class="text-[#e4e1ed]">Use column (f) adjustment code "B"</strong> (incorrect cost basis)
<strong class="text-[#e4e1ed]">Enter the adjustment amount in column (g)</strong> to arrive at the correct gain/loss
<strong class="text-[#e4e1ed]">Keep detailed records</strong> explaining every difference
This is the same process used for stocks when a 1099-B has incorrect basis. It's well-established and the IRS expects it.
What you should do NOW (2025-2026)
The fork between your records and the exchange's records is happening right now, every time you use a different cost basis method or transfer between platforms. The better your records are today, the easier 2027 will be.
Track every transaction across all exchanges and wallets
Choose and consistently apply your cost basis method
Keep lot-level records (which specific coins you bought and sold)
Use crypto tax software that maintains this history year over year
How CryptoTaxPilot prepares you
CryptoTaxPilot maintains your complete lot-level transaction history across all exchanges and wallets. When 1099-DAs arrive, we'll import them, show you every line where the exchange disagrees with your records, and generate Form 8949 with the correct adjustment codes.
Your records in CryptoTaxPilot are your source of truth. The 1099-DA is just a starting point.