CPAs and their clients, dealing with the new 1099-DA digital asset rules for the first time this year, have encountered a rather gross problem leading to increased stress and work. Specifically, brokers this year are only reporting gross proceeds from digital transactions, leaving the client and the accountant to work out the cost basis themselves.
The 1099-DA reporting requirements, governing digital asset transactions, are the result of the bipartisan Infrastructure and Investment Jobs Act that then-President Joe Biden signed into law in 2021, which classified crypto exchanges and trading platforms as brokers and
This year, brokers were only required to report gross proceeds. As a result, many CPAs this year have needed to reconcile the cost basis themselves, on top of resolving the data continuity challenges typical in digital asset accounting. This has not only meant more work for the accountant, but also more risk, according to Patrick Camuso, head of digital asset specialist firm Camuso CPA.
"There is also a preparer liability angle worth noting," he added. "The signing preparer is responsible for tax positions on the return even when crypto numbers come from a client-supplied report or third-party software. With 1099-DA data gaps this season, treating that report as a black box carries more risk. Our practice has always taken a full accounting plus tax approach for this reason and I'm now seeing more general practice firms recognize this and either adopting the same approach or partnering closely with established crypto accounting firms to manage the exposure."
Lisa Blackmore, tax partner at Top 25 firm Aprio, reported similar issues with cost basis reporting, which she said has served to reinforce the need for consistent processes, clear client communication and coordination across tax, advisory and technology teams. This is despite technically having more information from brokers than before.
"We now see that broker reporting does not remove the need for detailed reconciliation," she said. "In many cases, incomplete or inconsistent data still requires significant review."
Sean Stein Smith, chair of the Wall Street Blockchain Alliance and a tax practitioner himself, also noted struggles with "the cost basis question, which is where the complexity lives," especially for clients who have been dealing with digital assets for many years.
"Clients who have been moving assets across wallets and platforms for years are going to face some real challenges reconciling their records with what gets reported as the implementation continues," he said. "The potential for mismatches is significant, and the time to address that is before the client receives an audit notice and/or unexpected large tax bill from the IRS. One thing that I cannot emphasize enough is the importance of keeping solid records, educating clients on how this form works and what is coming next, and keeping ahead of the proverbial curve as the crypto market continues to change."
Tomer Siegal, vice president of product for digital asset-focused tax platform Ledgible, reported this has been a widespread issue among crypto-specialists. While the 1099-DA is meant to standardize digital asset reporting, the fact that this year's form only has gross proceeds has led to more work for tax preparers all over.
"For the 2025 tax year (reported in 2026), brokers are generally only required to report gross proceeds, without cost basis," he said. "Accounting professionals cannot simply 'plug and play' the data from the new Form 1099-DA. Because the cost basis is often missing or inaccurate, accountants are spending additional time on forensic reconciliation to try and match the gross proceeds to the client-maintained records."
He added that relying on the 1099-DA information won't be enough this year. There is a chance the client may not have even received the form in the first place (though in such cases the reporting requirements have not gone away). Practitioners need to focus on the completeness and accuracy of the wallets themselves.
Further, he added, practitioners need to understand new issues can emerge if the client acquired shares of a spot crypto ETF: Many are structured as non-distributing grantor trusts, and so won't report underlying fund gains or losses on a standard Form 1099-B. Instead, advisors must download tax information reports from the issuer's website to account for the taxpayer's allocable share of fund sales.
This speaks to a point made by David Zareh, a partner with digital asset specialist firm OnChain Accounting, who emphasized the importance of understanding not just the regulations but the sector itself, as many aspects do not fit into typical tax concepts.
"Practitioners should take the time to understand how digital asset transactions actually work," he said. "Crypto activity can involve staking, DeFi protocols, NFTs, bridging assets between chains, and many other transaction types that do not fit neatly into traditional tax reporting frameworks. Simply assigning gains and losses without understanding the underlying activity can lead to incorrect filings and unnecessary tax liabilities for clients. If a firm does not have deep expertise in this area, it is often best to partner with or outsource the reconciliation work to specialists who focus on digital asset accounting. Properly handling crypto reporting requires both technical knowledge and specialized tools, and getting it right is critical for protecting clients."
Zareh reported similar challenges as other practitioners this year but added that one positive has been providing clients a wakeup call on the importance of proper bookkeeping. While there has been something of a learning curve for many, he felt it would ultimately lead to better financial habits that would provide peace of mind for both themselves and their accountants.
"Overall, the long-term effect for clients is positive," he said. "The increased reporting requirements are encouraging better record-keeping and a more disciplined approach to tracking digital asset activity. Crypto has evolved into a significant asset class, and clearer reporting standards help bring legitimacy and structure to the space. Clients who take the time to properly reconcile their activity now tend to have much greater visibility into their portfolios and tax positions going forward."
People should not be waiting until tax time to think about their digital assets. Blackmore, from Aprio, said practitioners need to set expectations early and emphasize year-round recordkeeping.
"Clear communication with clients is key, particularly around what the 1099-DA does and does not cover," she said. "So far, crypto tax work requires repeatable processes and collaboration across teams. Practitioners should also be prepared to supplement broker data when needed,"
Smith added that accountants should not wait for their clients to bring this up. Based on his experiences this year, he said CPAs next year need to be more proactive in setting a strong reporting foundation.
"For next year, the lesson is straightforward," he added. "Don't wait. Get in front of clients now, audit their transaction history, and make sure their records are in order. Form 1099-DA is going to bring digital asset reporting into the mainstream, and the practitioners who prepared early are going to be the ones clients remember and value."
