Crypto Tax Records: What to Keep Before Tax Season (and the 1099-DA Gap They Fill)
Tax season is still months away, so why are your crypto records already a problem?
Because the form your exchange sends the IRS reports what you received, not what you paid — and only your own records can prove the difference.
For the 2025 tax year, custodial brokers reported gross proceeds on the new Form 1099-DA. Cost-basis reporting only starts with 2026 sales, and only for some lots. That gap is exactly what your records exist to fill — and December 31 is the last day of the tax year to get them in order.
Your 1099-DA Shows Proceeds. Your Records Prove Basis.
For 2025 sales, brokers reported gross proceeds only. Basis reporting starts with 2026 sales — and only for some lots.
Form 1099-DA is the IRS's dedicated return for digital-asset broker transactions. Custodial brokers — centralized exchanges, hosted wallets, some payment processors — must report sales on it for transactions on or after January 1, 2025. The IRS phases the reporting in: gross proceeds first, basis later.
The IRS confirms the schedule on its digital-assets page: brokers report gross proceeds for transactions from January 1, 2025, and basis on certain transactions from January 1, 2026. For the 2025 tax year, most forms were furnished by February 17, 2026 — and most omitted basis entirely.
That leaves a simple split of responsibility:
The form is not a tax bill. It is a matching document — the IRS compares what your broker reported against what you report on Form 8949. When the two disagree, the IRS asks questions. Your records are the answer.
The $80,000 Mistake: What Missing Records Actually Cost
If your 1099-DA shows $100,000 of proceeds and no basis, the IRS's matching system can treat the whole $100,000 as gain.
Say you bought 1 BTC for $80,000 in 2024 and sold it for $100,000 in 2026. Your real gain is $20,000. But your 1099-DA shows $100,000 of gross proceeds with the basis box blank — the exchange never saw your 2024 purchase, or the lot predates basis reporting.
If you file without proving the $80,000 basis, the automated match can flag $80,000 of phantom gain and generate a CP2000 notice. You can answer a CP2000 with your records — but only if you still have them. Exchanges keep history for a limited time, and some shut down entirely. A record you export today is evidence; a record you hope to download in April may not exist.
A sale, a swap, or spending crypto are all dispositions. Our earlier guide explains what actually triggers a tax bill — this post is about proving the numbers behind it.
Estimate Your Crypto Tax on a Single Sale
Since 2025, Basis Lives Wallet by Wallet
A sale is now matched only against units held in the same wallet or account — not against everything you own.
Before 2025, many holders tracked basis across all their wallets as one pool. Revenue Procedure 2024-28 ended that: from January 1, 2025, each wallet and each exchange account is its own cost-basis ledger, under Treasury Regulation §1.1012-1(j).
The revenue procedure offered a one-time safe harbor to allocate pre-2025 basis across the wallets holding those coins as of January 1, 2025. Those deadlines have now passed — the 2025 return was due April 15, 2026, or October 15, 2026 with an extension.
One window is still open: under IRS Notice 2026-20, through December 31, 2026, you can identify the specific units you sell from a broker account in your own books and records — recorded no later than the sale, or as a standing order — instead of telling the broker. From 2027, an identification counts only if it reaches the broker in time, so check what your platform supports before your first sale that year.
The practical consequence is simple: keep records per wallet, per account. When you move coins from a cold wallet to an exchange and sell, the exchange has no record of what you paid. Your 1099-DA will show the proceeds. Your books must show the basis.
The 7 Records the IRS Actually Asks For
The IRS lists exactly what it wants to see — six fields per transaction, plus the forms themselves.
On its digital-assets page, the IRS says taxpayers must keep records documenting each purchase, receipt, sale, exchange, or other disposition, plus the fair market value of digital assets received as income. To calculate a gain or loss, you need:
- Type of asset: Bitcoin, ETH, a specific NFT — "crypto" is not specific enough.
- Date and time: of acquisition and of each disposition. Time matters because prices move within a single day.
- Number of units: how much of the asset changed hands in that transaction.
- Fair market value in USD: at the moment of the transaction — for buys, sales, and income alike.
- Basis of the units sold: what you paid, including fees and commissions.
- Income received: the dollar value of any digital assets received as pay, rewards, or staking income.
- The forms themselves: every 1099-DA, 1099-B, or 1099-K you receive — plus copies of your own Form 8949 and Schedule D.
That is the minimum set. Anything less, and you cannot reconstruct a gain or loss at filing time — or defend it later.
What No 1099 Will Ever Show You
Non-custodial activity never reaches a broker's form. If it is not in your records, it does not exist on your return.
The 1099-DA rules cover custodial brokers only. Decentralized and non-custodial brokers — the wallets and protocols where you hold your own keys — are not in the current filing requirement. Five kinds of activity fall through that gap:
- DeFi swaps: swapping on a decentralized exchange is a disposition of the coin you sent. No broker reports it.
- Staking and mining rewards: ordinary income when received, reported on Schedule 1 — not on a 1099-DA.
- Gas fees paid in crypto: paying a network fee with crypto is itself a disposition of those units.
- Transfers between your own wallets: usually not taxable, but document them — otherwise software can count the same coins as a sale twice.
- NFT purchases paid in crypto: buying an NFT with ETH is a disposition of the ETH you paid with.
The Year-End Checklist: Do This Before December 31
The tax year ends December 31. These five steps take one evening — and they are hardest to do in April.
1. Export every exchange history
Download full CSVs — trades, deposits, withdrawals, and fees — from every platform you used in 2026. Keep the original files, not just a cleaned-up spreadsheet.
2. List every wallet address
Write down each self-custody wallet you used, its public address, and the dates you used it. Never put a seed phrase or private key in this file.
3. Reconcile your transfers
Match each move between your own wallets on both sides, so a transfer is never counted as a sale.
4. Log income events separately
Staking, mining, airdrops, and pay received in crypto — each with its date, amount, and dollar value at receipt.
5. Check your identification method
If you use specific identification for broker-held coins, record your choices in your own books before the December 31, 2026 relief window closes.
Estimate Your Crypto Tax on a Single Sale
Key Takeaway
Your exchange tells the IRS what you sold. Only your records tell it what you paid, which wallet the coins came from, and what happened off-exchange. In the first full year of 1099-DA reporting, that difference is the difference between a $20,000 gain and an $80,000 phantom one.
Export the records now, while the data still exists — your 1099-DA will not do it for you.
Frequently Asked Questions
Do I need records if I only bought crypto and never sold?
Yes. The purchase receipt is your cost basis for the eventual sale — without it, a future sale has no provable cost. Buying with fiat and never selling also means you can answer "No" to the digital-asset question on your return, but keep the receipt anyway.
What if my exchange shut down or deleted my history?
Reconstruct from bank and card statements, wallet addresses, and block explorers, and consider a tax professional for gaps you cannot close. The longer you wait, the harder reconstruction gets — another reason to export while the platform is still up.
How long should I keep crypto tax records?
Generally at least three years from the date you file the return for the year of the disposition — the IRS's general period of limitations — and longer in some situations. Keep purchase records until you sell, then for the retention period after that.
This article is general information, not tax advice. Tax rules change, and your situation may differ — consider a qualified tax professional before filing.
Sources
• IRS — Digital assets: irs.gov/businesses/small-businesses-self-employed/digital-assets
• TokenTax — Form 1099-DA Explained for Crypto (2026): tokentax.co/blog/form-1099-crypto-exchange
• J.K. Lasser — Your First Form 1099-DA: What Crypto Investors Need to Know: jklasser.com/news/your-first-form-1099-da-what-crypto-investors-need-to-know
• IE Tax Attorney — Form 1099-DA: New Crypto Reporting Rules Explained: ietaxattorney.com/form-1099-da-crypto-reporting
• The Bit Journal — Document Crypto Cost Basis: Essential 2026 Records: thebitjournal.com/document-crypto-cost-basis
• Sonic Wallet — Crypto Cost Basis: FIFO, Specific ID and HIFO: sonicwallet.com/learn/crypto/crypto-cost-basis-methods
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