Kraken sent out its first wave of Form 1099-DA statements this year, and a lot of traders opened them to an unpleasant surprise: a proceeds number that looks nothing like what they actually made.
A trader who flipped $40,000 between Bitcoin and Solana a dozen times might see six figures in “gross proceeds” on the form. The IRS gets a copy of that number. What the IRS does not get, at least for 2025 transactions, is the cost basis that turns those proceeds into a real gain or loss. Kraken reported what you sold for, not what you paid.
That gap is where people overpay.
What Kraken actually tells the IRS
For the 2025 tax year, Kraken’s reporting covered gross proceeds from reportable sales and dispositions across Kraken, Kraken Pro, and its Krak app. Crypto-to-crypto trades count. Fees paid in crypto can count. There was no minimum threshold, so even small accounts received forms.
The customer-facing statement may show a FIFO cost basis estimate and a gain or loss figure, but those were informational only. They never went to the IRS. If the basis field is blank because you transferred coins in from a wallet or another exchange, Kraken simply has no idea what you paid, and some tax software will read that blank as zero.
Zero basis means the software treats the entire sale as profit. On a $200,000 stablecoin conversion, that is the difference between a $300 gain and a $200,000 one.
The three places Kraken accounts go wrong
Transferred-in assets. Coins bought elsewhere and deposited into Kraken arrive with no purchase history. The sale gets reported, the basis does not, and the reconciliation lands on you.
Staking rewards. Kraken staking payouts are ordinary income at the fair market value when received, and that value becomes the basis for the eventual sale. Miss the income entry and you get taxed twice on the same coins.
Margin and futures. Leveraged products settle differently than spot trades, and the forms do not spell out the distinction. Active derivatives traders often need to reconstruct positions the 1099-DA never fully describes.
What to do before you file
Download everything: the combined 1099 package, the full Trades and Ledgers exports, and the transaction history from every wallet or exchange that ever sent assets into your Kraken account. Match each deposit to its source withdrawal. Rebuild the purchase price and acquisition date for every lot that later sold.
It is tedious work, and it is exactly the work that determines whether you pay tax on your real gain or on a fictional one. For a full walkthrough of how the forms, staking rules, and reconciliation process fit together, the specialists at Count On Sheep publish a detailed guide to Kraken taxes covering 1099-DA reporting, cost basis repair, and what changes for assets acquired after 2025.
The IRS already has your proceeds number. Filing without the basis to match it is how a routine crypto year turns into a five-figure mistake.
