Transferred-in digital assets are units a customer moves into a broker account from a self-custody wallet, another broker or any other external source, rather than buying them at that broker. The receiving broker records the arrival but not the original acquisition, so the units carry no purchase date or cost in that account.
A broker's records for a lot begin at the moment the lot enters the account. For a purchase that moment includes the price paid. For a transfer it includes only the units, the date of arrival and the address they came from. The broker cannot see whether the units were bought years earlier, received as staking rewards, taken out of a liquidity pool or moved from another exchange account the same customer holds. Each of those origins gives the units a different basis and holding period, and none of it travels with the transfer.
The sending side sees the same gap in reverse. A withdrawal from an exchange to a wallet is a transfer, not a sale, so it produces no proceeds and no Form 1099-DA line. The units simply leave one set of records and appear in another, and the link between the two exists only in the taxpayer's own history. A bridge transfer between chains adds a further hop with the same problem.
Under Regulations section 1.6045-1 a unit transferred into a broker account is a noncovered digital asset. When it is later sold, the broker reports the proceeds and is not required to report basis, unless it holds adequate basis information for the unit under the rules. In practice the Form 1099-DA line shows proceeds, an empty basis field, and an indication that basis was not reported to the IRS. The date acquired is also unknown to the broker, so the form cannot say whether the sale was short-term or long-term.
The taxpayer supplies everything the broker left out. The basis is whatever the units cost when they were first acquired, which for purchased units is the purchase price plus fees and for units received as income is the fair market value when they were received: under Revenue Ruling 2023-14 staking rewards are income at that value, and the same value becomes their basis. The holding period runs from the original acquisition date, not from the transfer date. Since January 1, 2025 basis is tracked wallet by wallet, so the units moving into the broker account carry the basis of the specific lot that left the sending wallet, and that lot has to be identified in the taxpayer's records at the time of the transfer.
The sale is entered on Form 8949 in the box for basis not reported to the IRS. Where the broker did report a basis for a transferred-in unit, from information the customer provided or from its own records, the figure is checked against the taxpayer's history rather than accepted, and corrected on the return if it is wrong.
An investor earns 2 ETH of staking rewards in a self-custody wallet when ETH is $2,500, reports $5,000 of income that year, later transfers the 2 ETH to an exchange and sells them for $6,000. The Form 1099-DA shows $6,000 of proceeds and no basis. The investor forgets that reported income created a $5,000 basis, enters zero, and pays tax on $6,000 of gain instead of $1,000, taxing the same $5,000 twice. The broker never saw the rewards and the form had no way to show them.
Read our 1099-DA accounting and cost basis reconciliation
CountDeFi traces transferred-in digital assets back to their original acquisition, including wallet transfer matching, income-derived basis and holding period evidence. See pricing.
