Exchanges will not provide the cost basis for coins you transfer in from a wallet. They only know what came in—the amount you originally paid for that crypto in your wallet is a record only you have.
Under the 1099-DA system, assets transferred from a wallet are marked as "noncovered assets." The exchange only reports the total gross proceeds you received when you sold. The cost basis field is left blank.
Step 1: Confirm that this asset is a "noncovered asset"
An exchange is only required to fill in the cost basis on a 1099-DA if all of the following conditions are met:
Case A: Covered asset—the exchange reports the cost basis
Bought on or after January 1, 2026;
Bought and sold within the same exchange account without being moved out in between;
The exchange tracked the full journey from purchase to sale.
Case B: Noncovered asset—the exchange does not report the cost basis (your situation)
Asset was transferred from an external wallet to an exchange;
No matter when you bought it in the wallet or how much you paid;
When you sell after the transfer, the exchange's 1099-DA will only fill in Box 1d (total proceeds). Box 1g (cost basis) will be blank or show 0.
Risk note: A missing cost basis on your 1099-DA does not mean the IRS ignores the transaction. When the IRS sees the total proceeds you received and no cost basis on your tax return, it can automatically send a CP2000 notice, treating your cost as $0 and asking for tax on the full amount. Legally, the responsibility for providing the cost basis is yours—not the exchange's.
Step 2: Find the original purchase cost record for this asset
Since the exchange won't provide the cost basis, you must dig up the original purchase records yourself before filing.
How to do it:
Export the purchase record from your wallet: If you bought on a DEX (like Uniswap), go to a block explorer and find the transaction hash of that swap. Note the time, the amount, and how many USDT you traded. If you bought on another exchange, download the trade history CSV from that platform.
Determine your cost basis: Cost basis is not simply "how much you paid." It can include eligible fees. Under IRS rules, the original cost of a digital asset is generally its value when you bought it. However, if you got the asset through staking rewards, mining, or an airdrop, the cost basis is its fair market value (FMV) at the time you received it.
Choose a cost accounting method: For 2025, you can choose FIFO, LIFO, HIFO, or Specific Identification. Starting in 2026, the IRS requires FIFO. If you bought in multiple batches, you need to use FIFO to identify which purchase lot matches the coins you sold.
Completion standard: You can produce a concrete number—the cost basis in dollars (or USDT) for the coins transferred from the wallet.
Step 3: Enter the cost basis on Form 8949 (do not modify the 1099-DA)
Many people misunderstand this: you don't ask the exchange to reissue a 1099-DA with the cost basis. For noncovered assets, the law does not allow brokers to report the cost basis. Even if you provide original proof, the exchange cannot change it.
How to do it:
On the relevant line of Form 8949, enter the total proceeds from Box 1d of the 1099-DA (sales proceeds).
In the "cost basis" column, enter the number you calculated in Step 2.
If this asset is a noncovered one (1099-DA cost basis is blank), put the appropriate explanation code in column (f) "Adjustment code"—usually "B" (cost basis not reported to the IRS).
Calculate the difference (sales proceeds minus cost basis) and enter it as a gain or loss.
Completion standard: The capital gain or loss for this transaction on your tax return uses your own cost basis, not the blank or zero from the 1099-DA.
Common mistake: Some people file using the "cost basis is 0" from the 1099-DA, thinking "that's what the exchange reported." But the IRS automatically compares the 1099-DA data it receives with the numbers on your Form 8949. If you leave the cost basis empty, the system assumes you agree the entire proceeds are a gain.
How to verify you've done it correctly
After completing the steps above, open the transaction list generated by your tax software (such as Koinly or TaxSlayer):
Find the transaction where the asset was transferred in and then sold. Confirm the "cost basis" column shows the number you entered, not 0.
Confirm that line on Form 8949 has a code in the "Adjustment code" column (like "B"), marking it as a self-reported cost basis for a noncovered asset.
Check that the "total proceeds" on the 1099-DA matches the "sales proceeds" on Form 8949. They must match, or the IRS will flag it as a mismatch.
Next step: Save the original purchase screenshot or CSV from your wallet in this year's tax folder, together with the 1099-DA and Form 8949. If the IRS later sends a CP2000 inquiry, you'll be able to provide the full cost-basis proof within 30 days. From now on, before you transfer any coins from a wallet to an exchange, make sure the original purchase record is already backed up locally.
