Form 1099-DA is new, the systems behind it are new, and the IRS gave brokers penalty relief for 2025 precisely because it expected mistakes. Notice 2024-56 says the IRS will not impose information reporting penalties on brokers for 2025 sales if they make good faith efforts to file accurate and timely forms.

That relief protects the broker. It does not protect you. If a wrong form says you had proceeds you did not have, or leaves out basis, the IRS’s matching systems compare the form to your return and the discrepancy lands in your mailbox. Here is how to deal with a bad form before that happens.

First, learn to read the form

The 2026 Instructions for Form 1099-DA describe the boxes. The ones that cause most of the trouble:

  • Box 1a and 1b: the digital asset code and name. Wrong asset, wrong form.
  • Box 1c: the number of units, which can run to 18 decimal places.
  • Box 1d and 1e: date acquired and date sold or disposed.
  • Box 1f: gross proceeds, net of transaction costs.
  • Box 1g: cost or other basis.
  • Box 2: checked if basis is reported to the IRS.
  • Box 4: federal income tax withheld (backup withholding).
  • Box 8: checked if the broker relied on customer-provided acquisition information.
  • Box 9: checked if the digital asset is a noncovered security.
  • Boxes 12a and 12b: number of units transferred in and the transfer-in date.

Box 2 and box 9 tell you the most about enforcement risk. If box 2 is checked, the IRS has the broker’s basis figure, right or wrong. If box 9 is checked and box 1g is blank, the IRS has proceeds and no basis.

The common errors

In my experience, wrong 1099-DAs fall into a few buckets.

  • Missing basis on assets the broker should have tracked. Possible for covered assets bought on the platform on or after January 1, 2026. Check box 2.
  • Transfers treated as sales. A move from the exchange to your own wallet is not a sale, but a coding error can make it look like one.
  • Duplicate reporting. The same disposition on two forms, or on a corrected form and an original you never received a void for.
  • Wrong units or wrong asset. Especially with tokens that were renamed or migrated.
  • Transaction costs double counted. Box 1f is already net of transaction costs; subtracting them again on your return understates gain.
  • Wrong taxpayer. A joint or custodial account reported under the wrong TIN.

Step one: ask the broker to correct it

Contact the broker in writing, identify the form and the specific box that is wrong, and attach your proof: transaction history, wallet records, or transfer confirmations. Ask for a corrected Form 1099-DA filed with the IRS.

A corrected form fixes the problem at the source, because the corrected information is what the IRS matches against. The instructions for Form 1099-DA refer brokers to Publication 1099 for corrected and void returns, so the mechanics are on the broker’s side. Your job is to make the request clear and documented, and to keep a copy.

If the broker will not correct it, or will not do it before your filing deadline, you still file a correct return. You just have to show the IRS the bridge between the form and the truth.

Step two: report the right numbers on Form 8949

The 2025 Instructions for Form 8949 added dedicated checkboxes for digital assets. For short-term transactions in Part I, you use box G, H or I. For long-term transactions in Part II, you use box J, K or L. The instructions say not to use box C or box F for digital assets.

  • Box G or J: a 1099-DA shows basis that was reported to the IRS.
  • Box H or K: a 1099-DA shows no basis, or shows basis that was not reported to the IRS.
  • Box I or L: no 1099-DA or substitute statement.

When the basis on the form is wrong, the instructions use adjustment code B. If the basis was reported to the IRS, enter the basis shown on the form in column (e), even though it is wrong, and correct it in column (g) using the Worksheet for Basis Adjustments. If the basis was not reported to the IRS, enter the correct basis in column (e) and enter zero in column (g).

That design is deliberate. Where the IRS has the broker’s number, your return shows the broker’s number and then the adjustment, so the IRS can see exactly where you differ and why.

Step three: keep a reconciliation file

For every 1099-DA you dispute, keep a one-page reconciliation: the form, what is wrong, what the correct figure is, the evidence, and the date you asked the broker to fix it. If the IRS asks later, that page is your answer.

If the problem is missing basis and your records are thin, the existing guide on rebuilding missing cost basis walks through reconstruction methods.

If the IRS notices first

If you filed without addressing the error, or the IRS’s systems did not accept your explanation, you may get a CP2000 proposing additional tax based on the form. That notice proposes changes and gives you a deadline to respond. See the CP2000 crypto guide.

A CP2000 can also propose an accuracy-related penalty under IRC 6662. Under Treas. Reg. 301.6751(b)-1(a)(3)(vi), a penalty proposed by an automatically generated notice is treated as “automatically calculated through electronic means,” which means written supervisory approval is not required. But the same rule says that if you respond and challenge the penalty or the underlying tax, and an IRS employee considers your response before assessment, the penalty is no longer treated as automatically calculated. Responding with evidence matters. See supervisory approval of crypto penalties.

What not to do

Do not ignore a form because you think it is wrong. The IRS already has it.

Do not report your own numbers with no reference to the form. Use the Form 8949 boxes and codes that show the IRS how you got from the broker’s figure to yours.

Do not overcorrect. If the broker’s basis is right and you simply do not like the gain, that is not an error.

And do not assume a wrong form is the broker’s problem alone. Under the 2025 Form 1040 instructions, you answer the digital asset question and report correctly whether or not you received a 1099-DA. The responsibility for your return stays with you.

A worked example

Say a 2026 form shows a sale of 1.5 units of an asset with gross proceeds of $90,000 in box 1f and basis of $30,000 in box 1g, with box 2 checked. You bought those units on the platform in 2026, but the broker missed a second purchase lot and your true basis is $60,000.

Because basis was reported to the IRS, you use box G or J depending on holding period. You enter $90,000 in column (d), the $30,000 the broker reported in column (e), code B in column (f), and a negative $30,000 adjustment in column (g), computed on the Worksheet for Basis Adjustments. The IRS sees the broker’s number, your correction, and the reason code. Your gain is $30,000, not $60,000.

Then you keep the purchase confirmations for both lots in your reconciliation file, along with your written request that the broker correct the form.

The bottom line

A wrong 1099-DA is fixable. Ask for a correction, report the right numbers with the right Form 8949 codes, and keep your proof. The taxpayers who get hurt are the ones who let the IRS find the discrepancy and then try to explain it from memory.