1099-DA Shows the Wrong Number. Now What? How to Fix Cost Basis Errors on Your 2025 Crypto Tax Return

Key Takeaways

Blank basis on your 1099-DA is not a figure you need to match. It means the broker did not report your cost. You must enter your actual cost in Column (e) of Form 8949, or you will overpay on phantom gains.
$0 basis and blank basis are different. Blank means the broker chose not to report. $0 means the broker is asserting your basis is zero, and if you paid for the asset, that $0 is a broker error per the 1099-DA instructions.
There are three categories of basis problems: same-platform blanks, transferred-in blanks, and incorrect reported figures. Each has a different fix and different Form 8949 treatment.
Use Adjustment Code B only when correcting a reported basis figure. When basis is simply blank (the majority of TY2025 transactions), enter your cost in Column (e) and leave Column (f) blank.
Sell-side fees in Box 1f are already netted from proceeds. Subtracting them again on Form 8949 is double counting, and one of the most common reconciliation errors I see in my practice.

You open your first Form 1099-DA and the proceeds number looks right. Then you look at the cost basis field and it says $0, or it is completely blank. Your stomach drops because the IRS is about to think you made a fortune on a trade where you barely broke even.

This is not a glitch. It is a structural feature of how the IRS phased in Form 1099-DA for Tax Year 2025, and if you do not fix it before filing, you will overpay on gains you never actually had.

I have been seeing this pattern in every crypto client file that has crossed my desk this season. Here is exactly how to identify the problem, reconstruct accurate basis, and report it correctly on your return.

Why Is My 1099-DA Cost Basis Wrong or Missing?

For Tax Year 2025, brokers must report gross proceeds for reportable dispositions on Form 1099-DA, but cost basis reporting is entirely voluntary. The IRS 1099-DA instructions are explicit: brokers are not required to report basis information for sales effected in 2025. Mandatory basis reporting begins for covered digital assets acquired on or after January 1, 2026.

This means that for most transactions on your TY2025 1099-DA, basis will either be blank or, in some cases, erroneously listed as $0. The distinction matters:

Blank basis means the broker chose not to report it. This is the expected default for TY2025 and does not indicate any error. You are responsible for supplying your own cost in Column (e) of Form 8949.

$0 basis has a specific meaning under the 1099-DA instructions: brokers are directed to enter $0 in Box 1g only if the asset's basis is actually zero. If you paid for the asset and your form shows $0, that is a broker error and needs to be overridden with your actual cost.

Some brokers may voluntarily report basis for assets that were both acquired and sold on their platform during 2025. If your form includes a basis figure, do not blindly accept it. Verify it against your transaction records before filing. Voluntary reporting in a first-year form is not guaranteed to be accurate.

For a full overview of what Form 1099-DA is and how every field works, see: Your First Form 1099-DA: What Crypto Investors Need to Know Before Filing in 2026.

How Much Does a Basis Error Cost You?

The math on phantom gains is straightforward and painful.

You sold ETH for $8,000. You originally bought it for $5,500. Your real gain is $2,500. But your 1099-DA shows $8,000 in proceeds and no basis. If you file without entering your $5,500 cost, you are paying tax on the full $8,000 as if you received it for free.

For a New Jersey filer in the top bracket, the combined federal rate (37% ordinary rate plus 3.8% Net Investment Income Tax above MAGI thresholds) and state rate (10.75% for income over $1 million) on short-term gains can exceed 51%. On $5,500 of phantom gain, that is roughly $2,800 in unnecessary tax on a single transaction.

Multiply that across dozens or hundreds of transactions over a year of active trading and the impact is material. This is the single most important thing to get right on your 2025 crypto return. The fix requires work, but it is work that pays for itself dollar for dollar.

What Are the Three Types of 1099-DA Basis Errors?

Not every basis issue on your 1099-DA has the same cause or the same fix. Here is how to categorize what you are seeing.

Type 1: Blank Basis on Same-Platform Transactions

You bought BTC on Coinbase in March 2025 and sold it on Coinbase in October 2025. The broker had all the information but chose not to report basis because it is voluntary for TY2025.

How to fix it: Pull your transaction history CSV from the exchange. Your purchase price plus any buy-side transaction fees is your basis. Enter it in Column (e) of Form 8949 under Box H (short-term) or Box K (long-term) depending on your holding period. No adjustment code is needed in Column (f) because you are providing an original figure, not correcting a reported one.

Type 2: Blank or $0 Basis on Transferred-In Assets

You bought BTC on Kraken in 2023, transferred it to Coinbase in 2024, and sold it on Coinbase in 2025. Coinbase has your sell data but has no record of your original purchase price or date. This is the transfer trap and it is the number one source of basis errors I am seeing this season.

How to fix it: Go back to the originating platform. Download your full transaction history from the exchange where you originally purchased the asset. Find the specific lot, confirm the purchase price and date, add buy-side fees, and use that as your basis. Transferred-in assets are noncovered, meaning basis is generally not required to be reported, and the receiving broker often will not have that information.

Boxes 12a and 12b on your 1099-DA flag transfer-in activity. Treat any line with these populated as high priority for basis verification.

One critical rule: starting January 1, 2025, Rev. Proc. 2024-28 requires per-wallet and per-account basis tracking. You cannot pool basis across platforms as a single aggregate number. For the full details on the two allocation methods and their documentation requirements, see my comprehensive 1099-DA guide.

Type 3: Reported Basis That Is Incorrect

Some brokers voluntarily reported basis but got it wrong. Common errors include using the wrong cost basis method (FIFO vs. Specific ID), failing to account for fees, applying an incorrect acquisition date, or miscalculating basis on crypto-to-crypto swaps.

How to fix it: If a specific basis figure was reported in Box 1g and it is incorrect, enter the correct basis in Column (e) of Form 8949 and use Adjustment Code B in Column (f) with the difference in Column (g). Code B signals to the IRS that you are correcting a figure the broker reported. Only use Code B when the broker actually reported a number. When basis is blank, you are supplying it fresh, not correcting it.

How Do I Reconstruct My Crypto Cost Basis?

Step 1: Gather Every Transaction Record

You need transaction history from every platform and wallet you used during 2025. For centralized exchanges, download the full CSV or transaction history export. For self-custody wallets, pull on-chain records using your wallet addresses through a blockchain explorer. You are looking for every acquisition event: purchases for fiat, swaps into the asset, staking reward receipts, airdrops, and mining income.

Step 2: Match Each Sale to Its Purchase Lot

For every sale, swap, or other disposition on your 1099-DA, identify the specific acquisition lot you are disposing of. This requires knowing your cost basis method.

FIFO (first in, first out) is the default method if you have not made a specific election. The oldest lot of that asset is treated as the first one sold.

Specific Identification allows you to designate which lot is being sold. For TY2025, Notice 2025-7 provides temporary relief allowing lot identification on your own books and records without needing broker system confirmation. This relief expires December 31, 2025.

For more on how FIFO, Specific ID, and the new per-wallet rules affect your basis calculations: Crypto Cost Basis in 2026: FIFO, Specific ID, and Why Your Wallet History Matters More Than Ever.

Step 3: Calculate the Basis for Each Lot

Your cost basis equals the amount you originally paid for the asset plus any buy-side transaction fees. Here are the common acquisition scenarios:

Direct fiat purchase: If you bought $5,000 of BTC with a $50 trading fee, your basis is $5,050.

Crypto-to-crypto swap: If you traded ETH for SOL, your basis in the new SOL is the fair market value of the SOL received at the time of the swap, which is also the proceeds figure for the ETH you gave up.

Staking rewards, airdrops, and mining income: Basis equals the fair market value of the tokens at the time of receipt. This is also the amount that should have been reported as ordinary income.

Step 4: Handle Transaction Fees Correctly

This is where many filers, even experienced preparers, make costly errors. The fee treatment on Form 1099-DA is different from what most people expect.

Buy-side fees: Add directly to your cost basis. This increases your basis and reduces your taxable gain.

Sell-side fees and Box 1f: Brokers are required under Reg. §1.6045-1 to reduce gross proceeds by allocable transaction costs before reporting in Box 1f. Start with Box 1f as your proceeds figure. If you have additional sell-side costs not already reflected in Box 1f, enter Code E in Column (f) of Form 8949 and a negative adjustment in parentheses in Column (g).

The double-count trap: This is one of the most common reconciliation errors I see. Do not subtract fees from a Box 1f number that already has them netted out. If Box 1f already reflects your fees and you subtract them again on Form 8949, you are double counting and artificially reducing your proceeds below what you actually received.

The sign error on Code E: When you enter a Code E adjustment in Column (g), it must be a negative number in parentheses because you are reducing an artificially high proceeds figure. Entering it as a positive number inadvertently increases your taxable gain, the opposite of what you intended.

Step 5: Run the Three-Way Reconciliation

This is the standard I use with every client file:

Source 1: Form 1099-DA: The IRS view of your proceeds from reportable broker-effected sales. Basis mostly absent, staking and DeFi excluded, de minimis and optional method carve-outs apply.

Source 2: Exchange CSV or API export: The broker's full transaction record. This is where your basis evidence lives for centralized exchange activity.

Source 3: On-chain and wallet data: Ground truth for self-custody activity including DeFi swaps, bridging, and wallet-to-wallet transfers. Must be self-reported.

Reconcile all three. Document every discrepancy. Your return can and should differ from the 1099-DA where you have better records. The goal is an accurate return, not a form that matches.

How Do I Report Corrected Basis on Form 8949?

For the transactions where you are supplying your own basis (the majority in TY2025), here is the correct Form 8949 treatment:

Column (a): Description of the asset (e.g., "2.5 BTC")

Column (b): Date acquired. From your records, not the 1099-DA if blank or unreliable

Column (c): Date sold. Match your 1099-DA

Column (d): Proceeds. Use Box 1f from your 1099-DA (or Box 11c for NFT aggregate reporting)

Column (e): Cost or other basis. Your reconstructed cost

Column (f): Adjustment code. Leave blank when providing basis that was not reported; use Code B only when correcting a specific reported basis; use Code E when adjusting for uncaptured sell-side costs

Column (g): Adjustment amount. Only populate when Column (f) has an entry; Code E adjustments go as a negative number in parentheses

Box selection: Box H (short-term, basis not reported) or Box K (long-term, basis not reported) for the vast majority of TY2025 1099-DA transactions.

What About Tax-Loss Harvesting on Corrected Returns?

If you sold crypto at a loss and repurchased the same asset within 30 days, wash sale rules do not apply to standard cryptocurrency for TY2025. Bitcoin, Ethereum, and most digital assets are classified as property under IRS guidance, not securities. IRC Section 1091 wash sale rules apply to stocks and securities, not property. Tax-loss harvesting remains a viable strategy.

This means that when you reconstruct your basis and discover you actually had a loss (not the gain the blank-basis form implied), you can and should claim that loss. Accurate basis reconstruction sometimes turns phantom gains into legitimate losses, which is exactly why this work matters.

The Lummis amendment to extend Section 1091 to digital assets was not included in the One Big Beautiful Bill Act signed July 4, 2025, and standalone bill S. 2207 has not passed. Wrapped tokens and liquid staking tokens occupy a fact-specific gray area. Discuss with your CPA.

How Long Should I Keep My Basis Documentation?

Keep the following records for a minimum of three years from the filing date (six years if gross income was understated by more than 25%, and indefinitely for fraud or failure to file):

Exchange transaction history CSVs for every platform used
Transfer records including wallet addresses, dates, and amounts
Original purchase confirmations or order history screenshots
Documentation of your cost basis method election (FIFO or Specific ID)
Rev. Proc. 2024-28 safe harbor allocation documentation if applicable
Fair market value records for staking rewards, airdrops, or mining income at time of receipt
Any correspondence with exchanges regarding corrections to your 1099-DA
The 1099-DA itself (retain every version including corrected forms)

The IRS may request substantiation through correspondence or examination. Your records are your defense.

When Should I Hire a CPA for 1099-DA Issues?

If your basis issues are limited to a few same-platform trades with straightforward purchase histories, a careful DIY filer can handle the reconstruction. Consider professional help if:

You transferred assets between multiple wallets and exchanges during or before 2025
You used DeFi protocols, staking, or lending in addition to centralized exchange trading
You cannot locate your original purchase records for some assets
You have high transaction volume (hundreds or thousands of trades)
You are a New Jersey filer where basis errors compound at the state level. NJ taxes all crypto gains as ordinary income, has no long-term preferential rate, and does not allow capital loss carryforwards in the disposition category
Your 1099-DA has figures you suspect are wrong, not just missing
You participated in crypto-to-crypto swaps where basis calculations involve fair market values at the time of exchange

For how NJ's unique rules affect your crypto tax exposure: How New Jersey Taxes Your Crypto: A State-by-State Gap That Catches NJ Investors Off Guard.

Frequently Asked Questions About 1099-DA Basis Errors

Do I need to match the basis on my 1099-DA when I file?

No. A blank basis on your 1099-DA is not a figure reported to the IRS that you need to match. When you enter your reconstructed cost in Column (e) of Form 8949 using Box H or K, you are filling in information the broker did not provide, not contradicting a reported figure. Keep documentation to support your numbers.

What if my 1099-DA shows $0 basis but I paid for the asset?

That is a broker error. The 1099-DA instructions direct brokers to enter $0 only when the basis is genuinely zero. Reconstruct your actual cost, enter it in Column (e), and document your records.

When do I use Adjustment Code B on Form 8949?

Use Code B in Column (f) only when a specific basis figure was reported on the 1099-DA (in Box 1g) and that figure is incorrect. When basis is blank (the default for most TY2025 transactions), just enter your basis in Column (e). No adjustment code needed because you are providing a figure, not correcting one.

How do I handle sell-side fees that aren't reflected in Box 1f?

Enter Code E in Column (f) and a negative adjustment in parentheses in Column (g). This reduces your reported proceeds. Do not subtract fees from a Box 1f figure that already reflects them. That is double counting.

What if I can't find my original purchase records?

Start with your exchange account history. Most platforms retain transaction records even for closed accounts. Check email confirmations and bank or credit card statements for purchase amounts. For on-chain acquisitions, blockchain explorers show transaction amounts and timestamps. If you genuinely cannot establish basis, you may need to use $0 as a conservative position, but exhaust every record source first because the tax cost of $0 basis can be severe.

Will the IRS know my 1099-DA basis is blank?

Yes. The IRS receives a copy of your 1099-DA showing the same blank basis. When you file Form 8949 with your reconstructed basis in Column (e), you are providing information the broker did not supply. This is expected and proper. It is exactly what the IRS anticipates for TY2025 given the voluntary basis reporting structure. Keep documentation in case of an inquiry.

Need a CPA to Review Your 1099-DA?

If you want a line-by-line review of your 1099-DA against your exchange CSV before you file, visit monacocryptotax.com or reach out via DM. This is the exact work I do for crypto clients every filing season, reconciling what the broker reported against what actually happened.

This article is for informational purposes only and does not constitute tax advice. Tax outcomes depend on your specific facts and circumstances.

Greg Monaco, CPA/MBA | NJ CPA License #20CC04711400 | Firm License #20CB00789800 | Crypto Tax: [monacocryptotax.com](https://monacocryptotax.com) | Full-Service CPA: [monacocpa.cpa](https://monacocpa.cpa)