Form 1099-DA arrived in 2025. Tax preparers without digital asset training face compliance gaps that threaten client relationships and professional liability. This new IRS information return changes how cryptocurrency, stablecoins, and NFT transactions are reported to taxpayers and the IRS.
What Form 1099-DA Reports
Form 1099-DA documents proceeds from digital asset dispositions. This includes sales, exchanges, and transfers of cryptocurrency, stablecoins, and non-fungible tokens. For 2025 transactions, brokers report gross proceeds only. Beginning in 2026, mandatory basis reporting applies to covered securities, with voluntary basis reporting available for noncovered securities.
Brokers must send taxpayers copies of Form 1099-DA by February 17, 2026, for 2025 activity. Not all clients receive this form. Only taxpayers who engaged in qualifying digital asset transactions through a broker will see it in their mailbox.
The Challenge Tax Preparers Face Now
The 2025 reporting year creates a critical gap. Form 1099-DA reports gross proceeds but does not include cost basis information. Taxpayers remain responsible for determining cost basis using transaction records, exchange statements, and wallet activity.
This puts tax preparers in a difficult position. Clients arrive with Form 1099-DA showing proceeds but no documentation of their purchase price, transaction fees, or other basis adjustments. Without specialized training in digital asset taxation, preparers cannot accurately calculate gain or loss.
What Triggers Form 1099-DA Issuance
Clients receive Form 1099-DA when they:
- Sold digital assets through a broker
- Exchanged one cryptocurrency for another
- Transferred ownership of digital assets
- Used digital assets to pay for goods or services
- Used digital assets to pay broker transaction costs
Each transaction type requires different tax treatment. A sale of Bitcoin for cash differs from exchanging Bitcoin for Ethereum. Both differ from using Bitcoin to purchase merchandise. Tax preparers must understand these distinctions to file accurate returns.
Universal Reporting Requirements
All taxpayers must report digital asset income, gains, and losses on federal tax returns regardless of whether they receive Form 1099-DA. The IRS added a digital asset question to Form 1040. Every taxpayer must answer "yes" or "no."
This requirement applies even when:
- The transaction amount seems minimal
- No Form 1099-DA was received
- The digital assets remain in a wallet
- The transaction occurred on a decentralized exchange
Tax preparers who skip this question or answer incorrectly expose clients to penalties and audits.
Why Certification Matters in 2026
Digital asset taxation operates under different rules than traditional securities. Cost basis tracking requires understanding of wallet types, blockchain transactions, and exchange records. Staking rewards, mining income, and airdrops each carry distinct reporting requirements.
Preparers without specialized training make costly errors:
- Misclassifying transactions as like-kind exchanges
- Incorrectly calculating wash sale rules for crypto
- Missing income from staking or mining
- Failing to report foreign account holdings
- Omitting NFT sales or creator income
These mistakes trigger IRS notices, amended returns, and client complaints. Professional liability increases when preparers handle asset classes outside their expertise.
What Changes in 2026 and Beyond
Starting with 2026 tax year filings, Form 1099-DA includes basis reporting for covered securities. Brokers will calculate and report cost basis directly on the form. This seems helpful until you examine the limitations.
Basis reporting only applies to:
- Digital assets acquired through the reporting broker
- Transactions the broker can track from acquisition to disposition
- Covered securities as defined by IRS regulations
Assets transferred from other wallets, purchased on different exchanges, or held in private wallets remain outside broker basis reporting. Tax preparers still need to reconcile client records, validate broker calculations, and determine basis for non-covered assets.
Required Knowledge Areas for Digital Asset Tax Prep
Competent digital asset tax preparation requires understanding:
Transaction Classification: Distinguishing between sales, exchanges, income events, and non-taxable transfers.
Basis Calculation Methods: FIFO, LIFO, specific identification, and when each method applies to digital assets.
Income Recognition: Timing and character of mining rewards, staking income, airdrops, hard forks, and DeFi yield.
Foreign Reporting: FBAR and FATCA requirements for digital assets held in foreign exchanges or wallets.
NFT Taxation: Collectibles treatment, creator income, royalty reporting, and marketplace transactions.
Record Reconciliation: Matching Form 1099-DA proceeds with client transaction history across multiple platforms.
Why Generic Tax Courses Fall Short
Standard tax preparer continuing education covers traditional securities and investment income. Digital assets operate differently. The IRS applies existing tax principles to a new technology, creating ambiguity and complexity.
A generic course might mention cryptocurrency. It will not explain:
- How to trace transactions across blockchain networks
- What documentation to request from clients
- How to handle missing basis information
- When to aggregate transactions versus reporting individually
- How decentralized finance protocols affect tax treatment
Tax preparers need specialized instruction that addresses these practical challenges.
Professional Development Requirements
The IRS does not currently mandate specific digital asset certification for tax preparers. Market demand drives the requirement. Clients with cryptocurrency holdings seek preparers who demonstrate competency in this area.
Voluntary certification demonstrates:
- Current knowledge of digital asset tax law
- Practical experience with common reporting scenarios
- Understanding of blockchain technology and transaction types
- Ability to use specialized software and calculation tools
- Commitment to professional development in emerging areas
As digital asset adoption grows, certification becomes a competitive differentiator. Preparers without digital asset training lose clients to competitors who offer this expertise.
Action Items for Tax Preparers
Immediate Steps:
- Review your current client base for digital asset holders
- Identify clients who likely received Form 1099-DA
- Request blockchain transaction records and exchange statements
- Update intake forms to capture digital asset information
- Enroll in specialized training before filing season peaks
Long-term Development:
- Complete comprehensive digital asset taxation courses
- Learn blockchain basics and wallet technology
- Test crypto tax software for your practice
- Build referral relationships with digital asset advisors
- Maintain continuing education in this rapidly changing area
Software and Tools
Form 1099-DA introduces new data import requirements. Tax preparation software must accept and process digital asset reporting forms. Preparers need tools that:
- Import multiple exchange transaction files
- Calculate gain and loss using various methods
- Track basis across wallets and platforms
- Generate required IRS forms and schedules
- Create audit documentation
Specialized crypto tax software integrates with traditional tax preparation platforms. Learning these tools requires training beyond standard software tutorials.
Client Communication
Clients do not understand their Form 1099-DA reporting obligations. Tax preparers must:
- Explain why gross proceeds alone do not determine tax liability
- Request complete transaction records from all exchanges and wallets
- Clarify the difference between receiving the form and having taxable events
- Set expectations about documentation requirements
- Address penalties for non-reporting
This client education requires knowledge preparers only gain through formal training.
The 2026 Filing Season Reality
Form 1099-DA creates a new compliance burden. Preparers handling digital asset returns without proper training risk:
- Filing errors that trigger IRS correspondence
- Understated income leading to penalties and interest
- Overstated basis resulting in refund adjustments
- Professional liability claims from dissatisfied clients
- Reputation damage in an increasingly digital marketplace
Specialized certification provides the knowledge foundation to handle these returns competently. TIG Tax Pros offers tax preparer certification courses designed for practitioners facing these new reporting requirements.
Digital asset taxation represents a permanent shift in tax preparation. Preparers adapt through education or lose market share to competitors who understand this asset class. Form 1099-DA reporting begins now. Training should have started yesterday.