Crypto and digital assets: how they are taxed and what Form 1099-DA means
Digital assets are property: sales and swaps create gains or losses, while staking and pay are income. What Form 1099-DA reports and what to keep for taxes.
Prepared by Prem Tax and Accounting Corp. Last checked against official sources on October 24, 2026.
The IRS treats digital assets as property. Selling or swapping them creates a capital gain or loss, reported on Form 8949 and Schedule D. Mining, staking, airdrops and getting paid in crypto are income. Every Form 1040 asks about digital assets, and you answer it even if no broker sends you a Form 1099-DA.
- Short term means held one year or less, and long term means held more than a year. Long-term rates are 0%, 15% or 20%.
- Swapping one coin for another is taxable. Buying with dollars, holding, and moving assets between your own wallets are not.
- Staking rewards are income when you gain control of them. Employee pay in crypto is wages.
- Form 1099-DA comes from custodial brokers such as exchanges and hosted wallets. No form does not mean no reporting.
How common events are taxed
| What happened | Usual treatment |
|---|---|
| Sold crypto for dollars | Capital gain or loss: Form 8949, then Schedule D |
| Swapped one coin for another | Capital gain or loss on the coin you gave up |
| Mined, staked or received an airdrop | Income, reported on Schedule 1 (Schedule C if it is a business) |
| Received a gift of crypto | Not income to you |
| Gave crypto to charity | No gain. The deduction is fair market value if held over a year, otherwise the lesser of basis or value. An appraisal is needed above $5,000. |
| Moved crypto between your own wallets | Not a sale. Paying a network fee in crypto counts as a transaction. |
Example (invented): you buy one coin for $2,000 and sell it 14 months later for $3,500. The $1,500 gain is long term. Sold after 10 months, the same gain would be short term.
Form 1099-DA in brief
- Who sends it: custodial brokers, including exchanges, hosted wallets, kiosks and some payment processors.
- Tax year 2025: it shows gross proceeds, and basis reporting is optional.
- From 2026 sales: basis is required for covered assets acquired after 2025 and held in custody.
- Decentralized platforms: Congress voided the broker rule for them in April 2025. The rules for custodial brokers remain.
- Wash sales: the official guidance we found does not settle whether they apply to ordinary crypto, so we do not assume either way.
What to bring or do next
- A transaction history from every exchange and wallet for the year.
- Your cost basis, tracked wallet by wallet.
- Any Form 1099-DA, when it arrives.
- A note of staking, mining, airdrops, and NFT or stablecoin activity, since those are digital assets too.
Common questions
Do I answer Yes or No to the digital asset question?
Answer Yes if you received digital assets as a reward, award or payment, or sold, exchanged or otherwise disposed of any. You can answer No if you only held them, bought them with dollars, or moved them between your own wallets.
Will my exchange report my cost basis?
For 2025 sales, brokers report gross proceeds and basis reporting is optional. For covered assets acquired after 2025 and held in custody, basis reporting becomes required. Track your own basis anyway.
What if I received no Form 1099-DA?
Report anyway. A transaction is taxable with or without a form, and not every platform is a custodial broker.
Are NFTs and stablecoins covered?
They are digital assets for the Form 1040 question. Ask us about the details of a specific token.
Official sources
- IRS: Digital assets
- IRS: Frequently asked questions on digital asset transactions
- IRS: Instructions for Form 1099-DA
- IRS: Revenue Ruling 2023-14 (staking)
- Public Law 119-5, enacted text
Keep reading
- What is the 1099-K threshold?
- How do I calculate adjusted gross income (AGI)?
- Individual tax preparation
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