Received a 1099-DA? How to Solve the New Crypto “Exchange Trap”
The days of “honor system” crypto reporting are officially over. As of January 2026, digital asset brokers are now required to issue Form 1099-DA. For the first time, the IRS is getting a direct line of sight into your cost basis and transaction history for Bitcoin, Ethereum, and NFTs.
The “Exchange Trap” is Real
The problem? Many exchanges don’t have your full history—especially if you transferred assets from a cold wallet or a different platform years ago. This leads to the “Exchange Trap,” where a 1099-DA might report your entire sale amount as 100% profit, ignoring the money you actually spent to buy the crypto.
Suddenly, a $50,000 trade looks like $50,000 in taxable income, and the IRS is sending you a bill for tens of thousands of dollars you don’t actually owe.
We Speak Crypto and IRS
If you’re staring at a massive tax bill because of a 1099-DA, don’t panic. Resolving crypto tax debt requires two things: forensic accounting to prove your actual cost basis and a professional negotiation with the IRS to handle the resulting debt.
- Penalty Abatement: We can often remove the heavy “Failure to Pay” penalties associated with crypto errors.
- Installment Agreements: We can set up a plan that protects your remaining assets while you pay off the actual tax owed.
The IRS is using 2026 technology to find you; you need 2026 strategies to protect yourself.