A client came to us with a crypto tax report generated by tax software. The accounts had been imported, the calculations were complete, and the report appeared ready to use.

Then we reviewed it against the client’s Form 1099-DA and the underlying transaction history.

What initially looked like a pricing difference turned out to be a much larger problem: the report could not be relied upon without substantial corrections.

What we found

Our review identified several specific issues:

• The gross proceeds in the crypto tax report differed significantly from the proceeds reported on Form 1099-DA.

• The software used different prices from the exchange for certain transactions, including stablecoin activity.

• Some withdrawals were not matched with deposits into the client’s other accounts. The software treated them as taxable sales instead of transfers.

• Certain deposits were missing their original acquisition history. The software assigned fair market value as their cost basis, which could understate the taxable gain when the assets were later sold.

• Transactions labeled as “spam” appeared to include actual token trades that should not have been excluded.

• Some of the client’s largest reported gains and losses lacked records showing when and how the assets were acquired.

• Assets appeared to have been unstaked, but the original staking transactions were missing. This broke the continuity of their cost basis and holding periods.

• Only the current year’s records had been provided, even though many assets had been acquired in earlier years.

No single item told the entire story. Together, however, they showed that the report was not ready to support a tax return.

Why the Form 1099-DA difference mattered

Crypto tax software and an exchange may occasionally use different pricing sources. But when that produces a significant difference from Form 1099-DA, it should not be ignored.

In cases like this, we generally recommend adjusting the pricing in the crypto tax software to match the exchange’s Form 1099-DA data. The exchange’s pricing reflects its actual transaction records, and Form 1099-DA is the information the IRS will receive and use for matching purposes.

A pricing adjustment alone, however, would not have fixed this client’s report. The unmatched transfers, unsupported cost basis, missing staking history, and incorrectly excluded transactions also had to be investigated.

Why the client could not see the problems

The client admitted that they imported their crypto transactions to the crypto tax software and generated a tax report for doing their tax return, without going through any reconciliation or review process, and they have been doing it for the past several years since they started investing in crypto. They thought that’s all they needed to do. This is very common among crypto investors.

The report did not come with a warning that said, “These numbers may be wrong.”

It looked complete. It contained transaction details, proceeds, cost basis, and calculated gains and losses. But the software could not determine whether:

• A withdrawal went to another wallet owned by the client

• A deposit was missing its original cost basis

• A transaction labeled as spam was actually a trade

• Prior-year activity had been omitted

• The exchange’s actual transaction pricing should replace the software’s pricing

Those questions require verification, not simply calculation.

Could this be happening in your report?

If you have already generated a crypto tax report, go back and check:

• Do the proceeds reasonably match your Forms 1099-DA?

• Are there significant differences in stablecoin or other transaction pricing?

• Does the report contain unmatched deposits or withdrawals?

• Were any transactions automatically labeled as spam?

• Can you support the cost basis of the assets producing your largest gains or losses?

• Are staking and unstaking transactions both present?

• Did you include the prior-year history needed to carry cost basis forward?

If any of these questions raise concerns, your report may not be ready to file, even if the software says it is complete.

That is the verification gap.

This real client case shows why generating a crypto tax report is not the same as verifying it. Unmatched transfers, missing cost basis, incorrect pricing, and other hidden errors can increase the risk of IRS scrutiny or cause you to overpay taxes on phantom gains that never actually occurred. Before those numbers become part of your tax return, use our Verify Before You File™ products to review your report, identify potential warning signs, and determine what may need to be corrected.

Explore Verify Before You File™ products and take the next step toward filing with greater confidence.