Coinbase Users Face Double Tax Bills Without Cost Basis on New 1099-DA
Crypto investors on Coinbase must supply cost basis for sales reported on new IRS 1099-DA forms due February 17 or face default $0 basis and double capital gains taxes. Lawrence Zlatkin, Coinbase's vice president of tax, warns missing cost data on $100,000 gains could increase bills by $7,500.
1. New IRS 1099-DA Reporting Requirements
The IRS has introduced 1099-DA forms for digital asset transactions, reporting only proceeds and excluding cost basis. Crypto exchanges, including Coinbase, must send these forms by February 17 for any trades, sales, or transfers that qualify as taxable events.
2. Default $0 Basis and Tax Impact
If investors omit cost basis details, the IRS system defaults to $0, taxing full proceeds. For example, a $100,000 gain on bitcoin could be taxed at 15% on $100,000 instead of $50,000, raising the bill from $7,500 to $15,000.
3. Coinbase’s Advisory and Risks
Lawrence Zlatkin, Coinbase’s vice president of tax, warns that missing cost data could lead to significant overpayments. He advises customers to proactively compile cost basis records to avoid default valuations and potential disputes with the IRS.
4. Strategies to Gather Cost Basis
Investors can obtain basis information directly from exchanges or hire specialized accountants to reconcile fragmented transactions across wallets. Early preparation is crucial to prevent costly errors and streamline filing for the 2026 tax season.