Form 1099-DA and Form 8949 are the two ends of digital asset sale reporting. The broker's Form 1099-DA reports each sale to the IRS; the taxpayer's Form 8949 lists every sale for the year, supplies the basis, computes the gain or loss and carries the totals to Schedule D of the income tax return.
Form 8949 has two parts, short-term in Part I and long-term in Part II, and within each part three boxes that describe where the sale came from: a box for sales the broker reported with basis to the IRS, a box for sales the broker reported without basis, and a box for sales that appear on no broker form at all. Every digital asset disposal for the year lands in one of the six. Each line carries the description, the dates acquired and sold, the proceeds in column (d), the basis in column (e), an adjustment code and amount in columns (f) and (g) where needed, and the gain or loss in column (h). The totals of each box flow to the matching lines of Schedule D.
Form 1099-DA supplies the raw material for the first two boxes and nothing for the third. A sale of a covered digital asset arrives with proceeds and basis and belongs in the basis-reported box. A sale of a noncovered digital asset arrives with proceeds only and belongs in the basis-not-reported box, where the taxpayer fills in the basis. Disposals in self-custody, on decentralised exchanges and through liquid staking tokens or other DeFi positions are the taxpayer's to report from their own records and belong in the box for sales not reported on a form.
Line by line. Each sale on the form becomes a line on Form 8949 with the form's proceeds in column (d). The IRS holds the broker's copy and expects to find those proceeds on the return, in the box that matches the form's basis-reporting indicator. For a covered sale the broker's basis goes in column (e); if the taxpayer's records show a different basis, the broker's figure stays in column (e) and the difference is entered in column (g) with code B, so the IRS can see both the reported number and the correction. For a noncovered sale column (e) holds the taxpayer's own cost basis from the acquisition records, and the holding period decides whether the line sits in Part I or Part II.
The flow is one-directional. The form feeds the return; the return does not have to agree with the form where the form is wrong, and it always has to contain more than the form does. The complete position is the sum of every box, and for most crypto investors the third box, the one no broker fills, carries a large part of the year's activity. Under section 1001 each of those disposals is a realisation event whether or not anyone reported it, and the omission of the third box is the most common way a return built from broker forms alone comes out wrong.
Where many sales share a box, the totals can be reported on a single line with the detail attached as a statement, which is the usual shape of a crypto return with thousands of disposals. The attached statement is the reconciled history, and its subtotals for the basis-reported and basis-not-reported boxes are what the IRS compares with the sum of the taxpayer's Forms 1099-DA.
Tax software that never reads the Form 1099-DA puts every disposal, exchange sales included, in the box for sales not reported on a broker form. The IRS holds forms showing $250,000 of proceeds in the basis-reported and basis-not-reported boxes and finds nothing in those boxes on the return. The total gain may be right, but the return no longer matches the broker filings box by box, and the mismatch reads as unreported sales rather than as a sorting error.
Read our 1099-DA accounting and cost basis reconciliation
CountDeFi prepares Form 8949 from your reconciled Form 1099-DA and complete transaction history, including box allocation, adjustment codes and the disposals no broker reports. See pricing.
