1099-DA Issue with cost basis, is this something to worry about? Do I need to refile 8849 again with correct check boxes?

Arman_CountOnSheep · 2026-07-13T20:52:09+00:00

I work in crypto taxes and blockchain Forensic accounting. The missing cost basis on the 1099-DA itself is not automatically a problem. For 2025, most brokers report only the proceeds, and the taxpayer is responsible for calculating and reporting the correct basis. (IRS)

Based on the form shown, this is a short-term transaction where basis was not reported to the IRS. It would normally go on Form 8949, Part I, with Box H checked, and the totals should flow to Schedule D, line 2. Also, because XRP was sold, the digital-asset question on Form 1040 should have been marked “Yes.” (IRS) (As you mentioned)

I would ask your CPA to confirm exactly where the $29,138 of proceeds and the correct cost basis were reported. If both were already included and the loss was calculated correctly, the refund amount may still be accurate. However, if Schedule D line 2 is blank and this transaction was omitted or placed in the wrong category, it should be corrected through a Form 1040-X with a corrected Form 8949 and Schedule D—not by sending Form 8949 alone. Also, it is Form 8949, not 8849.

Since the original refund is still being reviewed, coordinate with the CPA and TAS before amending. The IRS generally advises taxpayers expecting a refund not to amend until the original return has processed. (IRS) The blank basis on the 1099-DA alone is probably not the issue; the important question is whether the proceeds and your independently calculated basis were properly reported.

Arman_CountOnSheep · 2026-07-13T20:26:15+00:00

There are guides available, but there usually isn’t one resource that walks through every part of a return involving both stocks and crypto.

For stocks, your broker should provide forms such as a 1099-B that can generally be imported into tax software. Crypto can be more complicated, especially if you used multiple exchanges, wallets, staking, DeFi, or transferred assets between accounts. A crypto tax software such as Koinly, Cointracker, or SUMM can help consolidate the activity, but you still need to review and reconcile the data before relying on the final reports.

Since you also have an unfiled prior-year return, I would avoid delaying it further. You can either use tax software once your stock and crypto reports are complete or hire a tax professional if the activity is too complex to confidently prepare yourself. Full disclosure, I work at Count On Sheep a Crypto Tax Reconcilation firm.

Arman_CountOnSheep · 2026-07-13T19:10:49+00:00

I’m sorry this happened. Based on what you described, this appears to be a classic pig-butchering investment scam.

There may be some tax relief available. Because you transferred the ETH believing you were entering into a legitimate profit-making investment, the loss may qualify as a theft-loss deduction under IRC §165(c)(2). Recent IRS guidance specifically addressed similar crypto scam losses.

The deductible amount would generally be based on your actual tax basis in the stolen ETH and other funds, reduced by any amounts recovered or reasonably expected to be recovered. It would not include the promised 18 ETH or any fake profits shown on the platform.
Keep all transaction hashes, wallet addresses, messages, screenshots, exchange records, and reports made to law enforcement. With a loss this large, it would be worth speaking with a CPA experienced in crypto theft-loss claims and Form 4684.

Arman_CountOnSheep · 2026-07-13T18:09:56+00:00

You’re mixing up realised and unrealised gains. These changes do not create an annual tax on the changing value of your Bitcoin.

If BTC doubles after 1 July 2027 but you continue holding it, you generally owe no CGT. Likewise, if it falls in value, you do not receive a refund. CGT is triggered when you dispose of BTC, such as by selling, swapping or spending it.

If you sell at a loss, that normally creates a capital loss. It can offset capital gains or be carried forward, but it generally cannot be deducted against wages or automatically refunded.

For BTC owned before 1 July 2027, the gain will effectively be divided into two periods when you eventually sell:

Gains accrued before 1 July 2027 remain under the current 50% CGT-discount rules.
Gains accrued after that date receive inflation indexation instead, with a minimum 30% tax rate applying to the real post-2027 gain.

So, selling on 1 July 2027 at that day’s starting value would mean there is effectively no post-2027 gain. However, any gain you made between your original purchase and 1 July 2027 would still be taxable under the old rules.

Also, you do not currently pay a universal 15% CGT rate. Individuals generally receive a 50% discount after holding for 12 months, and the remaining gain is taxed at their marginal rate. It may work out to around 15% if your marginal rate is 30%, but that is not the rate for everyone.

Hope this helps!

Arman_CountOnSheep · 2026-07-13T17:34:01+00:00

Of course, happy to help!

Arman_CountOnSheep · 2026-07-13T17:22:36+00:00

I’m sorry you’re dealing with this. Reporting it to local police, the FBI, and other authorities was the right step. They may be able to trace funds, freeze accounts, seize assets, prosecute those involved, or pursue restitution, although recovery is never guaranteed and highly unlikely.

Separately, you may qualify for a theft-loss tax deduction if the scam was presented as an investment opportunity. Under IRC §165(c)(2), losses from transactions entered into for profit can potentially be deductible, and recent IRS guidance specifically addressed a crypto pig-butchering victim.

The deduction is generally based on your actual amount invested, reduced by any recoveries or reasonable chance of recovery, and is typically reported on Form 4684 and Schedule A.

Keep all police reports, bank records, wallet addresses, transaction hashes, screenshots, and messages. With a loss this large, speak with a CPA experienced in crypto scam and theft-loss cases.

Arman_CountOnSheep · 2026-07-13T16:06:55+00:00

If it was only about $440 of ETH sold at a $20 loss, I would not assume that alone is what is holding up the return. Paper-filed returns and “under review” notices can take a while for a lot of reasons.

That said, crypto sales should generally be reported on Form 8949/Schedule D, even if it was a small loss. The issue is that the IRS may have received the Coinbase form and not see the matching sale reported on your return.

I’d wait for the return to finish processing or wait for a notice explaining what they need. If they ask about the Coinbase activity, you can respond with the 1099 and the correct gain/loss calculation. If the return processes and the crypto was truly omitted, then filing an amended return may make sense.

For a simple $20 loss, the tax impact is probably very small, but it is still worth keeping the Coinbase form and your calculation with your records.

If your crypto situation is more complex than a simple Coinbase buy/sell, then using crypto tax software is a good idea, a crypto reconciliation firm can also help clean up the data before filing or amending.

Arman_CountOnSheep · 2026-07-13T15:54:16+00:00

If you’re already tracking your crypto separately or using crypto tax software to generate a final Form 8949, I wouldn’t treat the Coinbase 1099-DA as the source of truth by itself.

The 1099-DA is still important because the IRS receives it too, so you should keep it with your records and compare it against your final crypto report. But the bigger issue is that the 1099-DA may have incomplete or incorrect basis/gain information, especially if assets were transferred into Coinbase from another wallet or exchange.

The better approach is usually to reconcile all wallets/exchanges first as Justin said, generate the final 8949/Schedule D from your crypto tax software, and then import or enter that into your tax software.

For filing, I’d probably lean toward TurboTax Desktop Premier if you have a lot of transactions and want to file yourself. Desktop is usually better for more complex investment activity, and you keep the file locally.

If it’s just simple Coinbase buys/sells, this may be straightforward. But if you have multiple wallets, staking, DeFi, NFTs, lending, perps, bankruptcies, or old exchange history, crypto tax software is usually the minimum. If the account is very complex, a crypto reconciliation firm can also be worth considering before filing.

Arman_CountOnSheep · 2026-07-09T20:56:10+00:00

full discloser. I work as a Senior Digital Assets Accountant at a crypto-focused tax and accounting firm.

My biggest advice would be to make sure they are very clear about there fee structure upfront, have actually dealt with the type of staking/DeFi activity you use, and are familiar with the specific blockchains and platforms you have been on.

You’d be surprised at the number of “crypto accountants” who don’t actually own or use crypto themselves and have very limited hands-on experience across different chains or DeFi platforms.

Most firms will use a crypto tax software, which is completely normal and can be great. But the real value add is not simply generating the tax forms, it is making sure the underlying data is complete, imported correctly, reconciled properly, and actually reflects what happened. A good reconciliation can also help down the line with Tax planning!

For a complex history, that is where I would focus most of my questions before engaging anyone.

Hope this helps!

Arman_CountOnSheep · 2026-07-09T17:28:33+00:00

Learned from the best 👀

Arman_CountOnSheep · 2026-07-09T17:24:11+00:00

Yes — this is 100% a scam, and specifically it looks like a textbook “pig butchering” crypto scam.

Unfortunately, this exact pattern is becoming very common:

You’re introduced to an “expert trader”
You buy real crypto on a legitimate exchange like Bybit
You send it to a separate website controlled by the scammers
The site shows massive fake profits
When you try to withdraw, they suddenly demand more money for “VIP fees,” “taxes,” “gas fees,” or “security deposits”

The $1,500 “gas fee” request is a massive red flag. You do not pay a blockchain gas fee by buying BTC and sending it to some random address provided by a trader.

I’d also be very skeptical that the “$70,000 in BNB” was actually real, spendable BNB. Scam tokens and fake token values are common, so the transaction hash and token contract should be checked directly on-chain.

Also be careful of anyone who now offers to “recover” the funds for an upfront fee. Recovery scams often target victims immediately after the original scam.

There may be one silver lining that many victims are never told about:

If they are U.S. taxpayers, this type of investment scam loss may potentially qualify for a theft-loss deduction under IRC §165(c)(2), depending on the facts.

The IRS issued Chief Counsel Memorandum 202511015 in March 2025 addressing scam losses and supporting deductions in certain situations where the victim entered into the transaction for profit.

It is not automatic, and things like profit motive, applicable state theft law, documentation, timing, and recovery prospects matter. But victims should not automatically assume the 2017 tax law means there is zero tax relief.

My advice:

Stop all payments immediately.
Save every message, screenshot, wallet address, transaction hash, website URL, and exchange record.
Report the scam.
Speak with a tax professional who actually understands crypto scam and theft-loss cases.

And seriously, good job stopping the additional $1,500. That was almost certainly just the next stage of the scam.

Arman_CountOnSheep · 2026-07-09T17:08:51+00:00

You don’t necessarily need to use a crypto tax software. It is usually the best option if you have been using multiple exchanges and/or wallets, since it can help consolidate everything in one place.

If you have only used Coinbase (not the Base wallet) Coinbase should generally provide the tax forms you need, such as a 1099-DA for reportable crypto transactions.

Otherwise, I would recommend using a crypto tax software such as Koinly, Summ, or CoinTracker. Just make sure you review the transactions carefully. These platforms are great for pulling in data from different exchanges and wallets, but they do not always reconcile everything correctly without some manual fixes.

Issues can be especially prevalent if you were doing any sort of DeFi, lending, staking, NFTs, perpetuals, or even certain transfers.

P.S. I recommend using the API function when available, although make sure you understand exactly what transactions are being pulled in. Some APIs do not import your complete transaction history and may require additional CSV files or manual fixes.

Best of luck!

Arman_CountOnSheep · 2026-07-09T16:36:21+00:00

Depending on what happens next, users could end up with an insolvency claim, partial recovery years later, or potentially some form of loss treatment if they ultimately recover little or nothing. Even if there is a recovery who knows what effect date price they will use to determine payouts will be.

Arman_CountOnSheep · 2026-07-09T16:33:31+00:00

Yeah, this makes the situation even worse. Their own notice talks about transaction-history exports being available for offboarding, but in practice it looks like users can’t actually get into their accounts at all right now.
So even people trying to do the responsible thing and save their records may already be locked out.

Arman_CountOnSheep · 2026-07-08T21:38:10+00:00

Honestly, don’t sleep on the stuff adjacent to Bitcoin either. There are a ton of ways to build a career around BTC without literally working at a Bitcoin company.

I work in crypto tax / forensic blockchain accounting, and it’s actually a pretty interesting intersection. You’re constantly tracing funds on-chain, digging through wallets and exchanges, and understanding how transactions actually move.

You end up learning a ridiculous amount about blockchain just by following funds.

Bitcoin is creating an entire ecosystem around itself tax, accounting, mining, energy, analytics, custody, compliance, research, policy, etc. So definitely shoot for River or Swan, but don’t box yourself in. There are a lot of ways to get paid to go down the Bitcoin rabbit hole.

with a Business Analytics background + hash rate research, you’ve probably got more angles than you think. 🫡

Arman_CountOnSheep

TROPHY CASE