Cryptocurrency Tax Reporting in 2026: New Form 1099-DA and Beancount

General
1

With digital assets now a major part of many portfolios, I wanted to discuss how the tax landscape is changing and how Beancount users can prepare.

What is New for 2026

Form 1099-DA: Starting in 2026, cryptocurrency brokers and exchanges are required to issue Form 1099-DA reporting your digital asset transactions. This is similar to how brokerages report stock sales on 1099-B.

This means:

  • The IRS will know about your crypto sales
  • Matching between your return and 1099-DA will be automated
  • Underreporting is much more likely to be caught

How Crypto Taxation Works

Every cryptocurrency transaction is potentially taxable:

Taxable Events:

  • Selling crypto for USD (capital gain/loss)
  • Trading crypto for another crypto (capital gain/loss)
  • Receiving crypto as payment (ordinary income)
  • Staking/mining rewards (ordinary income)
  • Airdrops (ordinary income at FMV when received)

Non-Taxable Events:

  • Buying crypto with USD
  • Transferring between your own wallets
  • Gifting (up to annual exclusion limit)

Tracking in Beancount

The challenge is the volume and complexity. Here is a basic structure:

; Define your crypto commodities
1970-01-01 commodity BTC
1970-01-01 commodity ETH

; Opening balances
2024-01-01 open Assets:Crypto:Coinbase:BTC
2024-01-01 open Assets:Crypto:Coinbase:ETH
2024-01-01 open Income:Crypto:StakingRewards

; Purchase
2025-02-15 * "Buy BTC"
  Assets:Crypto:Coinbase:BTC  0.1 BTC {45000 USD, 2025-02-15}
  Assets:Bank:Checking       -4500 USD

; Staking reward (taxable as income)
2025-03-01 * "ETH staking reward"
  Assets:Crypto:Coinbase:ETH  0.01 ETH {3000 USD}
  Income:Crypto:StakingRewards -30 USD

; Sale (triggers capital gain)
2025-06-15 * "Sell BTC"
  Assets:Bank:Checking         5000 USD
  Assets:Crypto:Coinbase:BTC  -0.1 BTC {45000 USD, 2025-02-15}
  Income:Crypto:CapitalGains   -500 USD  ; 5000 - 4500 = 500 gain

The Practical Reality

Honestly, tracking crypto in Beancount gets overwhelming quickly if you:

  • Trade frequently
  • Use DeFi protocols
  • Have multiple wallets/exchanges

I use Beancount for the summary view but rely on specialized crypto tax software for detailed reporting:

  • Import all transactions to CoinTracker/Koinly/TokenTax
  • Generate Form 8949 from the software
  • Record the summary totals in Beancount for my overall financial picture

Questions

  • How is everyone handling the new 1099-DA reporting?
  • Any DeFi users tracking liquidity pool positions in Beancount?
  • Best practices for cost basis tracking across multiple exchanges?
2

The 1099-DA is going to be a wake-up call for a lot of people.

My Crypto Tax Workflow

I use a hybrid approach:

  1. Track holdings in Beancount - balances by asset, by exchange
  2. Export transactions to Koinly - let it handle the cost basis calculations
  3. Import Koinly summary back to Beancount - annual capital gains entry

This gives me the best of both worlds: Beancount as my single source of truth for net worth, and specialized software for the tax complexity.

The Cost Basis Problem

The biggest issue is transfers between wallets. Exchanges do not track cost basis when you withdraw. So:

  • Buy BTC on Coinbase at $30,000
  • Transfer to cold wallet
  • Transfer to Kraken
  • Sell on Kraken at $50,000

Kraken has no idea what you paid. They might report $0 cost basis on your 1099-DA, showing a $50,000 gain instead of a $20,000 gain.

Solution: Keep meticulous records of transfers. Tag every transfer transaction in Beancount with the original acquisition date and cost:

2025-04-01 * "Transfer BTC to cold wallet"
  Assets:Crypto:ColdWallet:BTC   0.5 BTC {30000 USD, 2024-06-15}
  Assets:Crypto:Coinbase:BTC    -0.5 BTC {30000 USD, 2024-06-15}

This preserves the lot information through transfers.

3

A word of caution from a CPA perspective on crypto taxes:

Common Mistakes I See

1. Ignoring Crypto-to-Crypto Trades
Many people think you only owe taxes when you cash out to USD. Wrong. Every trade (BTC→ETH, ETH→USDC, etc.) is a taxable event.

2. Forgetting Staking Rewards
That ETH you earned from staking? It is ordinary income at the fair market value when you received it. AND when you later sell it, you owe capital gains on any appreciation from that cost basis.

3. Lost Wallets and Missing Records
“I cannot access my old exchange” is not a defense. You need to reconstruct records. Old emails, blockchain explorers, anything.

4. Mixing DeFi and CeFi
Centralized exchanges are starting to report. DeFi is still the wild west. If you used Uniswap, yield farms, or bridges, you need to track those yourself.

IRS Enforcement is Increasing

The IRS has specifically trained agents on cryptocurrency. They have subpoenaed records from major exchanges. Penalties for non-compliance include:

  • Accuracy-related penalty: 20% of underpayment
  • Fraud penalty: 75% of underpayment
  • Criminal prosecution in extreme cases

My Advice

If you have significant crypto activity:

  1. Use professional tax software (Koinly, CoinTracker)
  2. Consider a CPA with crypto experience
  3. Keep all records forever
  4. Reconcile your Beancount balances against exchange records
  5. If in doubt, report more rather than less
4

I have been tracking crypto in Beancount for 3 years now. A few practical observations:

DeFi is Nearly Impossible to Track Manually

I tried tracking Uniswap LP positions, yield farming, and bridge transactions in Beancount. It was a nightmare:

  • LP tokens have constantly changing values
  • Impermanent loss calculations are complex
  • Yield accrues in real-time
  • Gas fees for hundreds of transactions

I gave up and now just track:

  • Total crypto holdings at year end
  • Annual realized gains/losses (from tax software)
  • DeFi activity as a single summary entry

My Simplified Crypto Beancount Structure

; High-level accounts only
2024-01-01 open Assets:Crypto:Total
2024-01-01 open Income:Crypto:RealizedGains
2024-01-01 open Income:Crypto:StakingIncome

; Year-end mark-to-market
2025-12-31 balance Assets:Crypto:Total  125000 USD

; Annual summary from tax software
2025-12-31 * "2025 Crypto Tax Summary"
  Income:Crypto:RealizedGains    -8500 USD  ; Net gains from Koinly
  Income:Crypto:StakingIncome    -1200 USD  ; Total staking income
  Equity:Adjustments              9700 USD

This gives me a clear picture without trying to track every swap.

My Recommendation

If you hold and trade occasionally: Track in Beancount with lot-level detail.

If you are active in DeFi: Use Beancount for summary only, specialized software for tax calculations.

The purity of tracking everything in plain text is not worth the time cost for complex crypto activity.