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That Form 1099-DA in your inbox might be wrong – and if you file without fixing it, you could overpay by thousands.
The Problem: Your Exchange Doesn't Know What You Paid
When you sell crypto, you only owe taxes on your profit. But calculating profit requires knowing your cost basis – the amount in dollars that you originally paid for the asset.
The good news? If you bought and sold on the same exchange, they’ll usually have your cost basis on file.
But if you transferred crypto onto an exchange from another platform or wallet, that exchange has no record of what you originally paid. Bad.
In these cases, your Form 1099-DA will show the cost basis as blank or $0. If you file without correcting it, the IRS may treat your entire sale as taxable profit, when in reality, only a small portion of the proceeds is actual profit.
Three Reasons Your Form 1099-DA Is Incomplete
You moved crypto between platforms
Bought Bitcoin on one exchange and sold it on another? The selling exchange has no idea what you paid. Your Form 1099-DA will show the sale amount but list cost basis as blank or zero.
You acquired crypto outside of exchanges
DeFi swaps, mining rewards, airdrops, staking income – none of these come with cost basis attached. If you later sold those assets on an exchange, your 1099-DA won't reflect what they were worth when you received them.
It's the first year of reporting
Exchanges are still figuring this out. For 2025, they're only required to report proceeds. Cost basis reporting doesn't become mandatory until future tax years.
What This Means for Your Tax Bill
Imagine you bought 1 BTC for $30,000 and sold it for $40,000. Your actual gain is $10,000.
But if your 1099-DA shows zero cost basis, the IRS sees $40,000 in taxable income. That's $30,000 in phantom gains – and a tax bill to match.
How to Fix It
You need to establish an accurate cost basis across every platform you've used. That means tracking down original purchase prices, matching transfers, and calculating gains correctly.
Summ handles this automatically. Connect all your exchanges, wallets, and DeFi protocols – Summ imports your complete history and calculates your true cost basis, even for assets you've moved multiple times.
Don't let yourself pay money you don't owe.
The information provided on this website is general in nature and is not tax, accounting or legal advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek professional advice. Summ (formerly Crypto Tax Calculator) disclaims all and any guarantees, undertakings and warranties, expressed or implied, and is not liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or Consequential Loss or damage) arising out of, or in connection with, any use or reliance on the information or advice in this website. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied. The information in this website is no substitute for specialist advice.
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