Coinbase Sends Out 1099-DAs | New IRS Form Triggers Confusion Among Crypto Traders

Coinbase is now sending out 1099-DAs, a new IRS form aimed at reporting crypto sales and trades. This marks a shift in how cryptocurrency transactions are documented for tax purposes, leaving many people unsure about their tax implications in 2026.

What You Need to Know About the 1099-DA

This form is crucial as it covers various crypto transactions, including:

• Crypto-to-cash sales

• Crypto-to-crypto trades

• Some stablecoin transactions

However, it excludes important activities such as:

• DEX or DeFi activity

• Transfers between wallets

• Trades on non-KYC exchanges

• Staking rewards, which are reported on 1099-MISC

The Cost Basis Issue

A significant concern among traders is the cost basis, which is missing for many transactions in 2025. Most 1099-DAs will show "Unknown" for cost basis if users transferred crypto from external exchanges or wallets.

"This part stresses people out it can look like you owe tax on the full sale amount without proper context," one user remarked.

The problem stems from Coinbase lacking visibility into what individuals originally paid for their crypto bought elsewhere. This makes calculating actual gains difficult and can lead to unexpected tax burdens.

User Responses and Advice

Traders are reacting strongly, urging each other to maintain thorough personal records. Feedback includes:

• "Keeping your own records across wallets makes tax season way less chaotic."

• "The 1099-DA is simply Coinbase's way of reporting to the IRS without the complete picture of your transactions."

Several participants emphasize the importance of tracking details over time. For those who see "Unknown" in their 1099-DA, the advice is to gather all records from previous platforms and transactions carefully.

Recommendations for Handling 1099-DA

People should:

• Check the 1099-DA for cost basis marked as "Unknown".

• Collect records from original crypto purchases and any transactions made on other platforms.

• Utilize tools like Koinly to help calculate actual gains.

Key Insights

• 🔶 Many 1099-DAs show unknown cost basis, confusing tax calculations.

• ❓ The shift in reporting is seen as a step towards standardization but lacks full transaction visibility.

• 🔍 "This sets a dangerous precedent," commented a user highlighting the challenges ahead.

Navigating new tax forms can be tough; it's recommended that crypto investors stay organized and proactive to avoid last-minute surprises come tax season.

What Lies Ahead for Crypto Tax Reporting

There’s a strong chance that clarity around the 1099-DA form will improve in the coming years, as more people seek guidance from tax professionals. Experts estimate around 60% of crypto traders may turn to dedicated tax software, pushing developers to enhance their products accordingly. As regulations evolve and the IRS gains experience with cryptocurrency, it’s likely that companies like Coinbase will find more efficient ways to report transactions, potentially including clearer cost basis entries. Furthermore, if traders can share their concerns more directly with exchanges, we might see calls for a more comprehensive reporting framework that provides deeper insights into individual trades.

The Historical Echo of Financial Adjustment

A fresh parallel can be drawn with the tumultuous early days of the stock market, particularly during the 1920s in the U.S. Investors faced substantial confusion with new trading practices and regulations post-World War I, much like today’s crypto traders grappling with 1099-DAs. Just as those early investors navigated shifting landscapes without complete information, modern traders are called upon to adapt while being proactive with their documentation. In both cases, a lack of clear guidelines drove individuals to self-educate and innovate strategies for financial stability.