The first filing season under new IRS rules requiring brokers to report gross proceeds from digital asset sales has created significant administrative burdens for US taxpayers. A survey by Awaken Tax found that 21% of respondents were still waiting for necessary information from exchanges, while another 20% reported their Form 1099-DA was incomplete or inaccurate. The core issue is that for the 2025 tax year, brokers generally reported only sale proceeds, not cost basis, forcing taxpayers to calculate gains and losses manually using their own records.
Tax professionals highlight discrepancies between exchange statements and actual transaction histories. Sharon Yip of Crypto Tax Advisors noted instances where clients had over $300,000 in stablecoin trades on an exchange, yet the corresponding 1099-DA showed less than $100,000 in proceeds. Andrew Duca of Awaken Tax pointed out that some platforms, such as Kraken, delayed sending forms until two weeks before the April 15 deadline, with one example showing no reported transaction information. Chris Herbst of CountDeFi emphasized that without cost basis, active traders see inflated gross proceeds figures that do not reflect real gains, requiring extensive reconciliation across multiple wallets and years.
The current regulatory framework creates a structural asymmetry where the IRS gains visibility into market activity without providing taxpayers with the complete data needed for accurate compliance. By mandating gross proceeds reporting while leaving cost basis determination to the individual, the agency shifts the operational burden onto investors who often lack unified transaction histories across fragmented exchanges and private wallets. This gap exposes taxpayers to audit risks if their manual calculations diverge from the limited data provided by brokers, particularly when assets move between platforms where acquisition costs are not transferred.
Looking ahead, the transition to mandatory cost basis reporting for covered assets in 2026 aims to resolve these ambiguities, but it does not fully address cross-platform transfer issues. Until brokers provide machine-readable files and maintain comprehensive transaction logs including fees and identifiers, the reliance on third-party software and manual entry will persist. This interim period highlights the need for improved infrastructure standards, as the current system’s lack of interoperability undermines both taxpayer confidence and the efficiency of regulatory oversight.
