Section 6-10: More Questions

1. What if a broker reports a transaction I believe was a non-taxable transfer?

   1. Contact the broker for a correction.

2. Will I get a separate 1099-DA for each digital asset I sell?

   1. No, they will likely be aggregated on one form, a consolidated 1099-DA. The IRS will receive one 1099-DA per sale

3. Do the new rules apply to stablecoin-to-stablecoin trades?

   1. Yes, this is an exchange of one digital asset for another and is reportable.

4. How does the 1099-DA increase my audit risk?

   1. It gives the IRS a direct report of your gross proceeds, making it easy for them to find discrepancies if you don't file or underreport.

5. What is the penalty for ignoring a 1099-DA?

   1. Failure to report the transactions can lead to back taxes, interest, and accuracy-related penalties (typically 20% of the underpaid tax).

6. Can I file an extension if I need more time to sort out my 1099-DA data?

   1. Yes, but an extension to file is not an extension to pay.

7. What if my broker goes bankrupt? Will I still get a 1099-DA?

   1. It is uncertain. You must rely on your own records.

8. Do the rules apply to business or just individual accounts?

   1. They apply to both.

9. How should I prepare for the arrival of the 1099-DA now?

   1. Start using a crypto tax software like Summ (formerly Crypto Tax Calculator) immediately to get a complete, reconciled history of your transactions and basis.

10. Will a 1099-DA show if my gains are short-term or long-term?

    1. For 2025, no. After that, it will by providing the acquisition and sale dates.

11. What if I use a crypto ATM?

    1. The ATM operator might be considered a broker and be required to issue a 1099-DA.

12. Will a 1099-DA show fees I paid?

    1. The reported "gross proceeds" are supposed to be before deducting fees, but you can typically adjust for these fees on Form 8949.

13. Will the 1099-DA include income from a "learn and earn" program?

    1. No, this is income, not a sale.

14. I'm a US citizen living abroad. Do these rules apply to me?

    1. Yes. The US taxes its citizens on worldwide income.

15. Does the form distinguish between NFTs and cryptocurrencies?

    1. Yes, the form has a checkbox to indicate if the asset is an NFT.

16. What if my name or TIN on the 1099-DA is wrong?

    1. Contact the broker for a correction immediately.

17. If I use my broker's tax reports now, will they match the future 1099-DA?

    1. They should be similar, but the official 1099-DA is the legally binding document.

18. Does the 1099-DA change the need to report foreign accounts on an FBAR?

    1. No. If you meet the FBAR filing threshold, you must still file it separately.

19. Will I get a 1099-DA from my hardware wallet company like Ledger?

    1. No. They are not brokers; they provide non-custodial software/hardware.

20. What if I disagree with the broker's calculation of cost basis (after 2026)?

    1. You can report a different basis on Form 8949 but should be prepared to explain the discrepancy.

21. How will the 1099-DA handle airdrops?

    1. It won't. The 1099-DA reports sales. Receiving an airdrop is an income event you must track separately.

22. Does this mean I can't use HIFO anymore?

    1. No, you can still use specific ID/HIFO, but you need flawless records.

23. What if I paid for something directly from my exchange account?

    1. This is a sale of crypto and will be reported on the 1099-DA.

24. Will my broker know if a transaction was a charitable donation?

    1. Not automatically. You would see a "sale" on your 1099-DA that you would need to correctly report as a non-taxable donation on your return.

25. Are there any unresolved issues with the 1099-DA rules?

    1. Yes, many, including the precise definition of a broker, especially regarding DeFi and NFTs.

26. What if I receive a 1099-DA for an account that isn't mine?

    1. This could be a sign of identity theft. Contact the broker and the IRS immediately.

27. How does this affect my quarterly estimated tax payments?

    1. If you have significant gains, the 1099-DA will make it easier for the IRS to see if you should have been making estimated payments.

28. If I stake on an exchange, will the rewards appear on the 1099-DA?

    1. No. The income from rewards will be on a 1099-MISC. The eventual sale of those reward tokens will be on a 1099-DA.

29. Will the form show the specific time of the transaction?

    1. It is required to show the date, and may also show the time.

30. What is the most common mistake taxpayers will make with the 1099-DA?

    1. Assuming the form contains all the information needed and failing to calculate and report their own cost basis.

31. What if a broker reports the wrong year for a transaction?

    1. Contact them for a corrected form.

32. How does the 1099-DA handle corporate actions like token splits or mergers?

    1. The rules for this are still developing, but brokers will have to attempt to report them.

33. Does the form apply to security tokens?

    1. Yes, as they are digital assets.

34. Can a broker issue a single, combined 1099-B and 1099-DA?

    1. This is unlikely; they are separate forms for different asset classes.

35. Will I get a 1099-DA for closing out a crypto loan (e.g., on Aave)?

    1. No, not from Aave. If you sold crypto on a CEX to pay back a loan, that sale would be on a 1099-DA.

36. What if my cost basis records are on a now-defunct exchange?

    1. This is a major challenge. You must try to reconstruct them from any records you have (downloads, emails, etc.).

37. How will the IRS match my 1099-DA to my Form 8949?

    1. Through your name and Taxpayer Identification Number (TIN).

38. If my cost basis is $0, do I still have to file?

    1. Yes, you must report the proceeds and the basis, even if it's zero.

39. Will this make filing my crypto taxes easier or harder?

    1. Both. It's easier because you have official proceeds figures, but harder because the IRS now has those figures too, demanding greater accuracy from taxpayers.

40. Does the form cover options or futures on crypto?

    1. Regulated futures typically go on Form 1099-B. The treatment of other derivatives is less clear.

41. What is "basis washing"?

    1. It's selling at a loss and buying back quickly. Unlike with stocks (wash sale rule), this is currently allowed for crypto but is aggressive. The 1099-DA will make such patterns visible to the IRS. Another term for this is ‘tax loss harvesting.’

42. How will the form handle delisted or "scam" coins I sold for nearly zero?

    1. It will report the proceeds, however small. It's up to you to report your original cost basis to claim the full capital loss.

43. Does the form apply to employer-granted crypto?

    1. The grant is income. The 1099-DA will report the eventual sale.

44. Will my CPA need a copy of my 1099-DA?

    1. Yes, absolutely. It's a foundational document for preparing your return.

45. What if I never provided my SSN/TIN to my exchange?

    1. They will likely be required to "withhold" a percentage of your proceeds for taxes.

46. Does the form show my net profit or loss?

    1. No, it only provides the gross proceeds. Net profit/loss is for you to calculate.

47. What if I disagree with the "digital asset type" listed on the form?

    1. This is less critical than the financial numbers, but you can still request a correction from the broker.

48. What is the single most important action to take in response to these new rules?

    Act now. Do not wait until 2026. Reconcile all your past crypto transactions and establish an accurate cost basis for every asset you own across every platform. Your future self will thank you.