If your Form 1099-DA shows $0 or a blank in the cost basis box, the broker is not saying you paid nothing. It is saying it does not know what you paid. Reporting that line as printed taxes the entire sale as profit, and it is the single most expensive mistake crypto investors will make this filing season. Here is why it happens and exactly what to do.
Key takeaways
- A blank or zero basis on Form 1099-DA means the broker cannot see your purchase, usually because the coins were transferred in from another wallet or exchange.
- You do not report the zero. You report the correct basis on Form 8949 with adjustment code B and keep the records that prove it.
- Basis appears on the form only for covered assets: coins bought and held at that broker on or after January 1, 2026. Everything else is noncovered.
- Under IRS Notice 2026-20, broker-held coins get transition relief through December 31, 2026 for identifying lots in your own records; self-custody wallets get none.
- If you cannot find the basis, reconstruction from exchange exports, block explorers, and bank records is usually possible, and it almost always costs less than the tax on a zero.
Why your 1099-DA shows zero cost basis
Brokers report what happened on their platform. A coin you bought on Coinbase, moved to a hardware wallet, and later sent to Kraken to sell arrives at Kraken with no history. Kraken reports the sale proceeds in box 1d and leaves box 1e, cost basis, empty or at $0, and checks the noncovered indicator. The IRS gets the same form.
This is the normal case, not an error. The rules in Treasury Regulation 1.6045-1 only require brokers to track basis for covered assets: digital assets acquired in a custodial account at that broker on or after January 1, 2026. For the 2025 tax year, no basis was reported at all. For 2026 and later, basis appears only for coins that never left the broker where they were bought. Anything transferred in, bought before 2026, or moved between your own wallets is noncovered, and for most long-term holders that is the majority of what they sell.
What zero basis costs you if you report it as printed
Proceeds minus basis equals gain. With basis at zero, gain equals proceeds, and every dollar of the sale is taxed. A $50,000 sale of Bitcoin you bought for $40,000 has a real gain of $10,000. Reported with a zero basis, the return shows a $50,000 gain and the tax bill is five times too high. Tax software imports the form as printed, and unless the basis is corrected before filing, that is the return that goes out.
What to do, step by step
- Confirm the form is right about the sale. Match box 1a (asset and units), 1c (date sold), and 1d (proceeds) to your own records. If the proceeds are wrong, or the line was a transfer rather than a sale, that is a different problem, covered below.
- Find the basis. Trace the coins back to where you bought them or earned them. Purchase: the dollar amount paid plus fees. Earned (staking, airdrop, payment): the value you reported as income when you received it. Gift: the giver’s basis. Inheritance: value on the date of death.
- Identify the lot. If you sold part of a holding, decide which lot you sold. Since 2025 this is done wallet by wallet. For broker-held coins, Notice 2026-20 lets you identify lots in your own records through December 31, 2026; for self-custody wallets, the identification had to be made at the time of sale, and the default is first-in, first-out within that wallet.
- Report on Form 8949. Enter the line in the noncovered section (box B or E, depending on holding period). Put the proceeds from the form in column (d). Put your correct basis in column (e). If the form reported $0, enter code B in column (f) and the basis adjustment in column (g), so the IRS can see you corrected a broker figure rather than ignored it.
- Keep the evidence. The exchange export showing the purchase, the blockchain record of the transfer, and the receiving broker’s transfer-in record (box 11 where present). This is what answers a CP2000 if one arrives.
Common variations
The basis is wrong, not missing
A broker that tracked part of your history may report a basis that is too low, for example the value on the day you transferred coins in rather than what you paid. Correct it the same way: code B and the adjustment on Form 8949, with records.
The line was a transfer, not a sale
Some brokers report outbound transfers to a wallet as dispositions. Those lines belong on Form 8949 with the adjustment that zeroes the gain and a note in your records that the coins moved to an address you control. The receiving wallet keeps the original basis. See transfer vs disposal.
The coins came from an exchange that closed
FTX, Celsius, Voyager, and others no longer provide exports. Basis can usually be reconstructed from bank statements (the dollars you sent), old confirmation emails, and the blockchain record of coins leaving the exchange. See exchange bankruptcy loss for the separate question of what you recovered.
You genuinely cannot find the basis
The IRS default is zero, but a reasonable, documented estimate is defensible: the price on the date the coins first appear in your records, from a consistent source, with the method written down. Zero is the answer of last resort, not the default you accept.
Why this gets worse in 2027
The 2026 forms, arriving by February 2027, are the first to carry basis at all. Investors will see a basis on some lines and a blank on others from the same broker, and software will treat the blank as zero. The mix of covered and noncovered lines on one form is new, and it is where most errors will come from. Reconciling before the import, rather than after, is the only reliable approach.
Frequently asked questions
Is a blank cost basis the same as zero?
No. Blank means unknown to the broker. Zero would mean you paid nothing, which is almost never true. Report your actual basis.
Will correcting the basis trigger an audit?
Correcting a broker figure with code B is the procedure the IRS designed for exactly this. What draws notices is proceeds that do not match, not basis adjustments with records behind them.
Can I just use the value when I transferred the coins in?
Not unless that is what you paid. Basis is the original purchase price or income value, and it carries through transfers unchanged. Using the transfer-date value overstates or understates gain.
Does the broker have to fix the form?
No. The broker reported correctly under its rules; it does not know your basis. You correct it on your return.
What if I have hundreds of these lines?
That is a reconciliation project rather than a form-by-form fix: every platform’s history matched, every transfer paired, every lot assigned. It is the core of a crypto tax return, and it is what we do.
Get the basis right before you file
Bring every 1099-DA, every exchange export, and every wallet address, including platforms that closed. 1099-DA reconciliation at Gordon Tax rebuilds the basis, pairs the transfers, and produces a Form 8949 that matches what the IRS holds, billed hourly with a written estimate up front.
This article is general information about tax and accounting topics and is not advice for your situation. Rules change; check the published and updated dates above and confirm current law before acting. Reading this article or contacting Gordon Tax does not create a client relationship.