Your accountant gets your 1099-DA. It says $47,000. They put $47,000 on your return as capital gains. You actually gained $3,200. The rest was cost basis you already paid tax on, or money you spent acquiring the asset in the first place.
What the form actually reports
Form 1099-DA reports gross proceeds. That's the total dollar amount you received from selling digital assets during the year. Not gains. Not profit. Just the sale amount.
This is the same mechanic as a stock brokerage's 1099-B, except 1099-B usually includes cost basis. With digital assets, brokers often don't have it. So 1099-DA gets issued without it, or with a basis figure that's wrong because the broker only knows part of the story.
The IRS receives the same form you do. When your return matches the 1099-DA number, everything looks fine on their end. The problem is that "matches" and "correct" aren't the same thing.
Why brokers don't have your cost basis
A centralized exchange knows what you bought on that exchange. It doesn't know what you paid for tokens you transferred in from somewhere else.
Say you bought 2 ETH at $1,500 each on a different exchange two years ago. Total cost: $3,000. You transferred those ETH to Coinbase this year, then sold them at $2,400 each for $4,800. Coinbase issues a 1099-DA showing $4,800 in proceeds. Your actual gain is $1,800. If your accountant files $4,800 as your capital gain, you pay taxes on $3,000 you never made.
That's not a rounding error. At a 20% long-term capital gains rate, it's $600 in overpayment on two ETH. Scale that across a year of activity and the number gets uncomfortable fast.
Where it gets worse
The missing-basis problem compounds with complexity. Tokens acquired through DeFi protocols don't come with broker cost basis records. Assets bridged across chains lose their paper trail from the broker's perspective. WBTC you wrapped, stETH you received from staking, ARB you farmed on Arbitrum and then moved to Coinbase to sell: all of it shows up as proceeds on the 1099-DA with no corresponding basis, because no single broker held the asset from acquisition to sale.
I've seen accounts where the 1099-DA gross proceeds number was six figures and the actual taxable gain was under $10,000. The difference was cost basis scattered across years of on-chain activity that no exchange had visibility into.
How accountants get this wrong
Most accountants who don't specialize in crypto treat 1099-DA the same way they treat a 1099-B from a stock brokerage. With stocks, that usually works. The broker knows what you paid because they held the shares in custody the whole time. Basis is reported, proceeds are reported, the math is done for you.
That's not what's happening with 1099-DA. But the form looks similar enough that a non-specialist won't question it. They enter the number, the return matches the IRS data, no flags get raised, and you've overpaid. The IRS doesn't catch it because overpaying isn't an error they're looking for.
How it should work
Cost basis needs to follow the asset from the moment you acquired it through every transfer, swap, and wallet move until the point of sale. That means pulling acquisition records from the original exchange, matching them to the correct lots when tokens move across wallets, and carrying the correct basis to whatever broker eventually reports the sale.
Moonscape reconstructs cost basis across your full transaction history, across every exchange and wallet you've used, so the gain figure your accountant works with is the actual gain, not whatever number a single broker happened to report. The 1099-DA becomes a reconciliation checkpoint, not the source of truth.
The 1099-DA isn't wrong. It's incomplete. Incomplete, in the hands of someone who doesn't know the difference, costs you money.