As leaves turn brown and tax deadlines loom, Fall 2025 marks one of the most important seasons yet for CPAs handling clients with digital assets. With new reporting rules, shifting guidance, and growing IRS scrutiny around cryptocurrency (crypto) & non-fungible tokens (NFTs), staying ahead is essential. Below are the key developments you need to watch, common pitfalls, and how leveraging tools like Hive Tax AI can sharpen your research, planning, and compliance strategy.
Key Developments for Crypto & NFT Taxation
- Form 1099-DA Goes Live
Starting January 1, 2025, digital asset brokers (crypto exchanges, hosted wallet providers, etc.) are required to issue Form 1099-DA for transactions involving digital assets. For the 2025 tax year, that means reporting gross proceeds from sales or exchanges.
Important: cost basis reporting is slated to begin in 2026. - Crypto Still Treated as Property
Under current IRS rules, crypto and other digital assets (including NFTs) are treated as property, not currency. That means any sale, exchange, disposition, as well as income from mining, staking, airdrops, hard forks, etc., must be handled using property/taxable events rules. - Wallet-by-Wallet Accounting & Cost Basis Pressure
Beginning 2025 / more strongly in 2026, cost basis disclosure (especially for brokers) becomes more central. CPAs must ensure clients’ records track cost basis (including fees) properly. Ambiguous or missing cost basis is a red flag. - NFTs & “Collectible” Classification Issues
NFTs can be taxed differently depending on how they are classified. Some NFTs may be considered “collectibles” under U.S. tax law (Section 408(m)), which carry a higher maximum tax rate (up to 28% for gains) compared to ordinary capital gains. The IRS has done “look-through” analysis to determine whether an NFT qualifies as a collectible. - Greater Reporting Obligations & Enforcement Risk
With the advent of 1099-DA, increased IRS digital asset guidance, and more legislative/regulatory focus (e.g. stablecoin regulation via the GENIUS Act, proposed bills affecting how digital assets are taxed) CPAs must expect higher visibility. Client readiness and accurate documentation are no longer optional.
Fall 2025 Common Pitfalls for CPAs & Clients
| Pitfall | Why It Matters | How to Avoid It |
| Missing or inconsistent cost basis | Without cost basis, gains/losses can’t be reliably calculated, often leading to overpayment or audit exposure. | Use wallet-by-wallet tracking; collect detailed transaction data (dates, fees, acquisition cost). Reconcile exchanges + self-custody wallets. |
| Misclassification of NFTs | Treating an NFT as a “normal capital asset” when it should be treated as a collectible can lead to under-taxing (or wrong reporting). | Review the nature of the underlying asset; apply IRS look-through analysis; document the classification decision. |
| Overlooking income events (airdrops, staking, hard forks) | These are taxable when recognized, even before disposal. Clients often fail to report, thinking only sales matter. | Maintain a calendar/ledger of income events; value at receipt; use software to pull in blockchain events. |
| Relying on exchanges alone for data | Exchanges may lack historical cost basis or full transaction history, especially for self-custody wallets. | Supplement with client records; use chain-analysis tools; verify with statements / on-chain data. |
| Underestimating reporting burden / timeline | Form 1099-DA, client data gathering, filings: delays in getting data from exchanges are already happening. | Start early; communicate deadlines to clients; set up data collection workflows. |
How Hive Tax AI Research & Planning Tools Can Help
To deal with this complexity, speed up research, and improve planning, CPAs should consider integrating AI-powered tools. One such tool is Hive Tax AI, which offers several advantages:
- Up-to-date regulatory & guidance monitoring: Hive Tax AI maintains current summaries of IRS rulings, legislative proposals, and case law related to digital assets, so you don’t spend hours digging through disparate sources.
- Tax scenario modeling & what-if analysis: For different crypto/NFT situations (e.g. if an NFT is collectible vs not, income vs capital gain, different holding periods), you can model tax outcomes, helping clients make decisions ahead of transactions.
- Automated transaction categorization & cost-basis reconciliation: Helps ingest data from multiple wallets/exchanges, flag missing data, suggest classifications, and reduce errors in building tax positions. This is especially useful with 1099-DA’s introduction, ensuring you enter accurate gross proceeds and cost basis where available.
- Planning calendars & alerts: Hive Tax AI can help plan ahead for upcoming deadlines (including when exchanges must issue forms, when client income events are likely, etc.), and alert you to changes (e.g. new guidance, tweaks in legislation) that may affect your clients.
- Audit-readiness & documentation tools: Having an audit trail—how you arrived at numbers, how you classified NFTs, etc.—is critical. Hive Tax AI can assist in creating and maintaining clean documentation of decisions, assumptions, and sources.
Strategic Steps CPAs Should Take Now (This Fall)
- Audit your clients’ digital asset universe: List all wallets, exchanges, token types, NFT holdings, income events (staking, airdrops, etc.), and check historical transaction data.
- Ensure cost basis is well documented: Go through each asset, verify acquisition cost + any related fees. If clients have used multiple wallets/exchanges, reconcile their holdings.
- Classify NFTs proactively: For each NFT, determine whether it may be a collectible (or could become one under IRS rules). Document your analysis now so you can advise clients on potential tax implications.
- Leverage Form 1099-DA data early: Since gross proceeds are being reported for 2025, prepare to receive, verify, and integrate that data. Be ready for cost basis reporting in 2026.
- Build workflows for recurring income events: Standardize how you capture staking income, mining rewards, airdrops etc. Clarify fair market valuation date, and make sure clients are aware these are taxable.
- Communicate with clients: Many clients with crypto/NFTs may still misunderstand reporting obligations. Send them clear checklists, deadlines, what data you need (wallet addresses, statements, etc.).
What’s on the Horizon: Legislative & Regulatory Things to Watch
- Stablecoin regulation under the GENIUS Act — how potential new rules around reserve backing, transparency, oversight could affect stablecoin users or issuers.
- Changes to cost basis / reporting mandates: the move toward reporting cost basis on Form 1099-DA (2026 onward) will put pressure on both brokers and taxpayers to have accurate records.
- Possible rules around classification of digital assets / NFTs expanding: further IRS guidance or case law on what constitutes a collectible, or what attributes trigger collectible status.
- Increased enforcement: With broader reporting, IRS is better positioned to cross-check blockchain data, exchange reports, and taxpayer disclosures.
Conclusion
Fall 2025 is shaping up to be a tipping point for crypto & NFT taxation. For CPAs, the combination of new reporting forms, unsettled guidance (especially around NFTs), and higher client expectations means that being proactive is no longer a luxury—it’s essential.
Ready to elevate your fall workflow? See how our AI tax tool AI tax research and AI tax planning tools can elevate your practice? or Book a demo or explore how our AI-powered platform can streamline your firm’s operations and elevate your advisory services—effortlessly.