1099- DA AIM Financial | Grand Rapids, Michigan Tax Preparation

Cryptocurrency and other digital assets have become increasingly common, but reporting digital asset transactions on a federal income tax return can be confusing. If you sold Bitcoin, exchanged cryptocurrency, or completed other digital asset transactions through a broker, you may receive IRS Form 1099-DA.

Understanding this form is important for taxpayers who want to report their transactions accurately and avoid overlooking taxable gains or losses. For individuals in Grand Rapids, Kentwood, Wyoming, Middleville, and throughout West Michigan, knowing what digital asset tax documents mean can make income tax preparation more straightforward.

AIM Financial helps taxpayers organize tax documents and prepare federal income tax returns. This guide explains what Form 1099-DA reports, how cryptocurrency sales may be taxed, and which records to keep.

What Is IRS Form 1099-DA?

IRS Form 1099-DA is titled Digital Asset Proceeds From Broker Transactions. It is used by qualifying brokers to report certain digital asset transactions to the IRS and provide transaction information to customers.

Digital assets can include cryptocurrencies such as Bitcoin and Ether, certain stablecoins, and nonfungible tokens (NFTs).

The IRS introduced Form 1099-DA as part of expanded reporting requirements for digital asset brokers. Brokers generally began reporting gross proceeds for covered transactions occurring in 2025, with reporting requirements for tax basis being phased in for certain transactions beginning in 2026.

That means taxpayers may encounter Form 1099-DA when reviewing documents for the 2025 tax year and later years. The information reported can vary depending on the transaction date and the applicable reporting rules. <Cite refs={[“turn274105search1″,”turn274105search21”]}/>

Important: Form 1099-DA reports transaction information. It does not automatically calculate your final taxable gain or loss.

Who Might Receive Form 1099-DA?

You may receive Form 1099-DA if you sold or otherwise disposed of digital assets through a broker that has a reporting obligation.

Examples of transactions that may be reportable include:

• Selling cryptocurrency for U.S. dollars.
• Selling digital assets through a participating digital asset platform.
• Selling certain NFTs through a broker.
• Completing other transactions covered by the applicable digital asset reporting rules.

Not every cryptocurrency transaction will generate Form 1099-DA. Transactions conducted through platforms or arrangements that are not subject to the same reporting rules may not result in this form.

Even if you do not receive Form 1099-DA, you may still have a tax reporting obligation. Taxpayers are generally responsible for reporting taxable digital asset transactions whether or not an information return is issued.

What Information Does Form 1099-DA Report?

Form 1099-DA provides information about reportable digital asset transactions. Depending on the transaction year and applicable rules, the form may include:

• The gross proceeds from a digital asset sale.
• The date of the transaction.
• The digital asset involved.
• The number of units sold.
• Information identifying the broker and recipient.
• Cost basis information when reporting rules require or permit it.

One important distinction is the difference between gross proceeds and taxable gain.

Gross proceeds generally refer to the amount received from a sale before subtracting the asset’s cost basis and any applicable transaction costs. Taxable gain or loss is generally determined by comparing the amount realized with the asset’s adjusted basis.

For example, suppose you bought cryptocurrency for $2,000 and later sold it for $3,200. Before considering applicable fees or adjustments, the transaction would produce a $1,200 gain.

If the cryptocurrency were instead sold for $1,500, the transaction could produce a $500 loss, subject to the applicable tax rules.

The amount reported as proceeds on Form 1099-DA is therefore not necessarily the amount of income you owe tax on.

Are Cryptocurrency Sales Taxable?

Selling or exchanging cryptocurrency may create a taxable event under federal tax law.

The IRS generally treats digital assets held as investments as property. When you sell, exchange, or otherwise dispose of a digital asset held as a capital asset, you generally calculate the gain or loss using the amount realized and your adjusted basis.

For many individual investors, capital gains and losses are reported on Form 8949 and summarized on Schedule D of the federal income tax return, as applicable.

The holding period may also affect the tax treatment. Depending on the circumstances, a gain may be short-term or long-term.

Other digital asset activities can have different tax consequences. For example, cryptocurrency received as payment for services may be ordinary income, while mining or staking rewards may require separate analysis.

Do not assume that every digital asset transaction is a capital gain or that every amount reported by a platform is taxable income.

What If Your Form 1099-DA Does Not Show Cost Basis?

For some transactions, Form 1099-DA may report gross proceeds without providing the cost basis needed to calculate the gain or loss.

This can happen because basis reporting requirements are being phased in and differ by transaction and asset classification. For 2025 transactions, brokers generally were not required to report basis on Form 1099-DA. Beginning with qualifying transactions in 2026, basis reporting applies to certain covered digital assets. <Cite refs={[“turn274105search21″,”turn274105search22”]}/>

If basis is missing, you may need to reconstruct it using your own records.

Helpful records can include:

• The date and price at which you acquired the digital asset.
• The number of units purchased or received.
• The date and proceeds from the sale.
• Trading fees and other relevant transaction costs.
• Records of transfers between wallets or platforms.
• Information about gifts, mining, staking, or other methods of acquisition.

A transfer between wallets you own is not automatically the same as a sale. Keep records that help establish whether a transaction was a transfer, a purchase, a sale, or another type of disposition.

How Do You Report Digital Asset Transactions on Your Tax Return?

The correct form depends on the type of transaction.

Form 8949 and Schedule D: Generally used for sales or other dispositions of digital assets held as capital assets.

Form 1040 and Schedule 1: May be relevant for certain ordinary income from digital asset activities, such as qualifying mining or staking rewards.

Schedule C: May apply when digital assets are received as payment in a business or independent contractor activity, depending on the circumstances.

The IRS provides specific guidance for reporting different kinds of digital asset transactions. Review the applicable instructions rather than assuming all activity belongs on one form. <Cite refs={[“turn274105search1”]}/>

If you received Form 1099-DA, compare it with your own transaction history. Make sure that proceeds, basis, dates, and other relevant details are reviewed before filing.

Common Cryptocurrency Tax Mistakes

Taxpayers may make avoidable mistakes when they:

• Report gross proceeds as though they were automatically taxable profit.
• Forget to report sales because no Form 1099-DA was received.
• Use an incorrect or incomplete cost basis.
• Treat transfers between personal wallets as sales without examining the facts.
• Overlook fees or transaction records relevant to calculating gain or loss.
• Assume cryptocurrency received for services is treated the same as an investment sale.
• Fail to reconcile broker statements with their own transaction records.

Keeping complete records throughout the year can make these issues easier to address during tax preparation.

How AIM Financial Can Help With Digital Asset Tax Reporting

Cryptocurrency transactions can create complicated reporting questions, especially when assets have moved between several exchanges or wallets or when cost basis information is incomplete.

AIM Financial assists individuals and businesses seeking income tax preparation services in Grand Rapids, Kentwood, Wyoming, Middleville, and surrounding West Michigan communities.

If you bought, sold, exchanged, or received digital assets, organize your Form 1099-DA, exchange statements, transaction history, and acquisition records before preparing your return.

Contact AIM Financial to discuss your income tax preparation needs. Reviewing your digital asset documents can help identify the information needed to report transactions accurately.

Final Thoughts on IRS Form 1099-DA

IRS Form 1099-DA is an important development in digital asset tax reporting. It provides information about certain broker transactions, but taxpayers may still need their own records to calculate gains, losses, and other reportable income.

Understanding the difference between gross proceeds and taxable gain, keeping accurate cost basis information, and using the appropriate IRS forms can help make cryptocurrency tax reporting more manageable.

For taxpayers in Grand Rapids and throughout West Michigan, AIM Financial can help review tax documents and address questions that arise during federal income tax preparation.

This article is for general educational purposes and is not individualized tax or investment advice. Digital asset reporting requirements depend on the transaction, tax year, and applicable federal rules.