As part of a strategic partnership with Summ, Patrick Camuso, CPA has prepared this in-depth educational article examining the most consequential shift yet in digital-asset tax reporting: the introduction of Form 1099-DA. Patrick Camuso, CPA breaks down why 1099-DA represents the first real stress test of the Digital Asset Compliance Era and explains what investors, founders, and high-volume traders need to understand to stay defensible as automated reporting and reconciliation-driven enforcement take hold.

For much of its history, digital-asset tax compliance operated in an informal, self-directed environment. Record keeping was fragmented, reporting practices varied widely and enforcement relied heavily on selective audits and subpoenas rather than standardized reporting.

That era is ending.

Form 1099-DA marks a structural shift in how digital-asset activity enters the tax system through standardized third-party reporting, automated matching and reconciliation-based enforcement. Form 1099-DA is not the cause of the transition but it is the first large-scale stress test of what I refer to as the Digital Asset Compliance Era.

Defining the Digital Asset Compliance Era

The Digital Asset Compliance Era describes a structural shift in how digital-asset activity is evaluated, enforced and reconciled for tax, accounting and reporting purposes.

Its defining characteristics are:

• Third-party information reporting at scale
• Automated discrepancy detection
• Reconciliation-driven enforcement workflows
• Institutional expectations for documentation, methodology and internal consistency

This mirrors how compliance evolved in traditional financial markets decades ago. 

What Form 1099-DA Actually Is (and Is Not)

Form 1099-DA is a broker-filed information return. Its purpose for 2025 is narrow which is to report standardized proceeds-level disposition data for certain broker-effectuated digital-asset transactions.

It is not:

• A tax return
• A complete activity ledger
• A determination of gain or loss
• Proof that a taxpayer’s reporting is incorrect

It is best understood as a data input designed to support automated matching and discrepancy detection between broker-reported proceeds and what appears on Forms 8949 and Schedule D. It represents a partial ledger, one that captures what the broker observed, not the full economic history of the asset.

Why Matching, Not Audits, Is the Immediate Risk

The near-term risk associated with 1099-DA is automated matching. 

In practice, enforcement will likely follow a layered sequence:

1. Information returns are ingested
2. Proceeds are matched against filed returns
3. Discrepancies generate automated notices (often CP2000)
4. Unresolved issues escalate procedurally

This process does not pause when cost basis is missing. Under longstanding substantiation principles, missing or unreported basis shifts the burden to the taxpayer rather than delaying enforcement.

Why Cost Basis Is Often Missing on Form 1099-DA

A common point of confusion is the absence of cost basis on early Forms 1099-DA. In most cases, this is not a data error. It is a structural consequence of the covered-asset rules. Brokers generally may report basis only for assets they tracked continuously from acquisition through disposition within the same account.

Once custody lineage is broken, assets are typically treated as non-covered. In those cases, brokers are not required and often not permitted to report basis they did not track. As a result, proceeds reporting can be complete while basis reporting is legitimately absent.

Basis, if missing, must be substantiated by the taxpayer. That substantiation occurs on Form 8949, where adjustments are asserted and defended. This is where most issues will surface.

The Structural Problem: Historical Accounting Debt

The deeper issue exposed by 1099-DA for long term investors is not current-year reporting. It is unresolved historical accounting that impacts cost basis calculations.

Early digital-asset activity often occurred without reliable records, standardized tools or consistent methodologies. Multi-year cost basis gaps are common in practice.

The IRS has repeatedly stated that digital-asset non-compliance remains widespread. In most cases, this is driven by incomplete accounting histories that make accurate current year reporting difficult or impossible without historical cost basis reconstruction.

Why You Cannot “Start Clean” in the 1099-DA Year

Cost basis is cumulative. Each disposition depends on acquisition data that may originate years earlier. Form 1099-DA does not directly expose early-year activity. Instead, it reveals whether historical accounting can support current-year reporting outcomes. If cost basis cannot be substantiated for assets that are sold, reconciliation fails. This is why many taxpayers will discover that they cannot simply “start clean” in the year 1099-DA reporting begins.

Rev. Proc. 2024-28 and the End of Universal Pooling

Revenue Procedure 2024-28 further tightens the reconciliation framework and cost basis tracking by formalizing the transition away from universal pooling toward account- or wallet-level basis tracking.

Defensibility now depends on consistency, documentation and alignment with how transactions are reported externally.

Why Notices Are the Worst Time to Fix the Problem

Once a notice is issued, timelines are short, documentation may be stale or inaccessible, and procedural pressure increases. Exchange shutdowns, lost credentials and data decay compound the problem.

By the time correspondence begins, the accounting work required to defend a cost basis position should already be complete.

Why 1099-DA Is the First Real Stress Test

For the first time, standardized third-party proceeds for digital assets data enters automated systems at scale. That data does not need to be comprehensive to be effective. It needs only to be consistent enough to test whether reported outcomes can be reconciled.

This is why 1099-DA is the first real stress test of the Digital Asset Compliance Era. Taxpayers whose historical accounting and cost basis calculations are complete and defensible will protect their bottom-line. 

About Summ

Summ simplifies crypto tax reporting across 3,500+ wallets, exchanges, and blockchains. It generates precise, accountant-endorsed reports for a wide range of crypto activity, including DeFi and on-chain transactions, helping users stay fully compliant.

Meet the author

Patrick Camuso, CPA, is the Managing Director of CamusoCPA, the only Forbes Best-In-State Top CPA firm built crypto-native since 2016. Patrick Camuso, CPA is a nationally recognized leader in cryptocurrency accounting and taxation. After beginning his career advising hedge funds, private equity firms, and investment managers at Deloitte, he became an early adopter of cryptocurrency and went on to found Camuso CPA in 2016, one of the first U.S. firms built exclusively for crypto investors and Web3 businesses, now widely recognized as a category-defining leader in the field.

Today, Patrick is the only CPA honored as a Forbes Best-In-State Top CPA for cryptocurrency, a distinction awarded to fewer than 1% of CPAs nationwide. He is a national speaker at premier blockchain conferences, a continuing professional education (CPE) instructor training CPAs worldwide, a podcast host, and an author. His insights have been featured in Forbes, Financial Times, Accounting Today, Bloomberg Tax, and other leading industry outlets.

Patrick is also recognized for developing industry-leading methodologies that ensure data integrity, regulatory compliance, and IRS-defensible strategies for digital asset investors and Web3 businesses.

Camuso CPA delivers audit-ready accuracy and full-service support by uniting crypto accounting, tax preparation, planning, resolution, and advisory with a proprietary reconciliation process that ensures data integrity, eliminates software errors, and provides investors and founders with the financial clarity to protect and grow their portfolios. Learn more about Patrick & Camuso CPA

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