I'm dealing with a situation and need some guidance.
missing 1099 from defunct exchange. I've been dealing with this for about 7 months now and the situation isn't improving.
I have already tried to resolve this directly but got conflicting advice.
Has anyone been through something similar? What worked for you?
I practice in this area. Here's my take on the legal issues.
This is a common situation and the law is fairly clear. Under the relevant statute, actionable.
You should consult with a local attorney who handles these cases. Many offer free initial consultations.
I've dealt with this before.
I ended up having everything documented, which cost about $3-6 but saved me a lot more in the long run.
I've seen this play out several times in my field.
In my case, it took about 3-6 months to resolve. The key was having everything documented.
I've seen this play out several times in my field.
The biggest mistake people make in this situation is escalating to a supervisor/manager. I'd recommend following the formal complaint procedure instead.
CPA specializing in cryptocurrency taxation here. The missing 1099 from a defunct exchange is a scenario I deal with regularly, especially after the collapse of FTX and several smaller platforms. Here is the practical approach I use with my clients.
First and most important: you are still required to report your crypto transactions regardless of whether you receive a 1099. The IRS has made this abundantly clear in their FAQ on virtual currency and in Notice 2014-21. The obligation to report lies with the taxpayer, not the exchange. A missing 1099 is not a defense to underreporting income.
For reconstructing your transaction history from a defunct exchange, several approaches work. If the exchange had a bankruptcy proceeding (like FTX under Chapter 11), the bankruptcy trustee often makes account statements available through the claims portal. Check the bankruptcy case docket. If the exchange simply shut down without formal proceedings, check whether you downloaded any CSV exports or transaction histories before it closed. Also check your email for trade confirmations and deposit/withdrawal notifications.
If you cannot reconstruct exact records, the IRS accepts reasonable estimates supported by whatever documentation you can gather. Use blockchain explorers (Etherscan, Blockchain.com) to trace on-chain transactions to and from your wallet addresses. Cross-reference with bank statements showing fiat deposits to the exchange. Document your methodology thoroughly in a memo attached to your return -- this demonstrates good faith and reduces penalty exposure if audited.
Regarding cost basis: if you truly cannot determine what you paid for the crypto, the IRS does not allow you to simply use zero basis (which would maximize your gain). Instead, apply the best available evidence -- market prices on the dates of acquisition, average cost basis from the exchange period, or comparable transaction data. Some crypto tax software platforms have built-in tools for estimating basis from defunct exchanges using historical price data.