XRP Tax Records: A 5-Stage System for the 1099-DA and HMRC
How XRP holders can map, pull, label, price and reconcile crypto tax records as the 1099-DA, CARF and HMRC nudge letters put platform data in tax offices' hands.
Key takeaways
- Exchange reports are not tax calculations. HMRC says platforms won't track your pooled costs and you must keep your own records.
- Swapping XRP into a stablecoin or another coin can be a taxable disposal, even if no money reaches your bank account.
- On the 2025 Form 1099-DA, the cost basis box is blank. US filers are expected to enter their own figure on Form 8949.
- Label transfers between your own exchange accounts and wallets, and keep XRP destination tags, so moved coins don't look like they vanished.
- According to the video, about 20 minutes a quarter on records is better than a lost weekend after a tax letter arrives.
Tax authorities now see more of your crypto activity than ever. According to the video, the UK’s tax authority, HMRC, sent 81,172 crypto tax letters, emails and texts in one year, nearly three times the number from two years earlier. In the US, this is the first year exchanges have reported crypto sales straight to the IRS on a new form, the 1099-DA.
The data is already flowing from platforms to tax offices. The question the video raises is whether your own records match theirs. It sets out a five-stage system for getting XRP and other crypto records in order before anyone asks. The host notes the video is education and commentary, not tax advice, and that rules depend on where you live.
Why do crypto tax records matter right now?
New reporting systems in the UK and US mean platforms now send your transaction data directly to tax authorities. The video gives this timeline:
- January 2025: In the US, cost basis has to be tracked wallet by wallet, not as one big pot. Cost basis is what you paid for your crypto, including fees.
- January 1, 2026: UK crypto platforms began collecting customer details and transactions under CARF, the Crypto-Asset Reporting Framework.
- July 2026 to March 2027: HMRC is sending another wave of crypto tax letters.
- October 15, 2026: The filing deadline for US taxpayers who filed an extension.
- May 31, 2027: The first CARF reports go to HMRC. Countries then start swapping that data with each other.
The 81,172 UK letters were sent before CARF even started reporting. In the US, exchanges now report crypto sales on the 1099-DA.
Stage 1: Map every place your crypto has ever lived
The first step is a full list of everywhere you have held crypto. The host compares it to a trading journal: you can’t fix what you can’t see.
The list should include:
- Every exchange you’ve used, including ones you stopped using and ones that have shut down.
- Every wallet you control. For XRP, that’s your address starting with “r”, whether it’s in a phone app or on a hardware wallet.
- Anything else: crypto in a pool, crypto funds in a brokerage account, and forgotten stablecoins.
Closed exchanges matter. The video says many exchanges have closed this year, and when one closes, your history can go with it. If you still have access to an account, download your history now.
The map comes first for a reason. HMRC’s own guidance says exchange reports are not tax calculations, won’t track your pooled costs, and that you must keep your own records. According to the video, that HMRC page names XRP right at the top. In the US, wallet-by-wallet cost basis tracking makes the map necessary there too.
Stage 2: Pull the raw data
For every exchange on your map, download the full transaction history as a CSV file, not a summary, for every year you used it.
For your own wallets, you can pull the history from a block explorer, a website that shows public ledger activity. For XRP, search your r-address on an XRP Ledger explorer and every payment in and out will be listed.
The video highlights one XRP-specific detail. When you send XRP to an exchange, you usually include a destination tag, a number that links the deposit to your account there. Keep those tags. They show that XRP left your wallet and landed in your own exchange account. Without them, a transfer can look like it disappeared.
The video also recommends:
- Screenshot your balance in every wallet and exchange at the end of each year. The host cites a tax law firm that recommends this because it makes cost basis work easier later.
- Keep everything in one folder, with a subfolder for each year, plus an offline backup.
- Never store your tax folder and your seed phrase together. Your records can live on a laptop. Your seed phrase shouldn’t.
Stage 3: Label every movement
Every line in your records should get one of seven labels, because some movements can be taxable and others aren’t:
- Buy
- Sell
- Swap
- Transfer to yourself
- Income
- Gift
- Spend
In the UK, HMRC guidance lists four ways to dispose of crypto:
- selling it
- exchanging it for a different crypto
- using it to pay for things
- giving it away, unless the recipient is your spouse, civil partner or a charity
The second item catches people out. Swapping XRP into a stablecoin or another coin can be a disposal, even though no money touched your bank account. In the US, the 1099-DA also counts crypto-to-crypto trades in your proceeds.
The label the video says saves the most trouble is transfer to yourself. Moving XRP from an exchange to your own wallet isn’t a sale. Unlabeled, though, it looks like coins vanished from one place and appeared in another. That is the kind of gap that won’t match platform reports.
Income is its own category. Staking rewards and airdrops can be taxed as income rather than gains. The video adds that any yield comes with risk, including losing what you put in.
Stage 4: Price it with your own cost basis
Stage 4 is recording what you paid, including fees, because the forms may not record it for you.
In the US, the 1099-DA for 2025 shows what you sold for, but the box for what you paid is blank. The video’s example: someone buys XRP for $10,000 and sells it for $12,000. The form only shows $12,000. Without their own cost basis, it can look like the whole $12,000 was profit rather than $2,000.
According to the video, the IRS knows the box is blank this year and expects you to enter your own figure on Form 8949. From 2026 trades onward, exchanges start reporting cost basis too, but mainly for crypto bought and kept on the same exchange. If you bought XRP on an exchange, moved it to your own wallet, then sent it back to sell, that exchange may not know what you paid. That number has to come from you.
The UK works differently. HMRC uses pooling, where you average the cost of all your tokens of one type. The video walks through HMRC’s own example:
| Step | Tokens | Cost |
|---|---|---|
| Buy 100 at £2 | 100 | £200 |
| Buy 300 at £1 | 300 | £300 |
| Pool total | 400 | £500 (average £1.25 each) |
| Sell 20 | 20 | £25 allowable cost |
Special rules apply if you buy back the same day or within 30 days. And as HMRC said in stage 1, the exchange won’t track your pool for you.
The host puts it this way: an unrecorded entry is a guess, and in tax records a guess becomes someone else’s number.
Stage 5: Reconcile, then get it checked
Reconciling means putting your numbers next to what platforms report about you and looking for gaps.
In the US, compare your records with your 1099-DA. Your proceeds should at least match what the IRS was sent, because, according to the video, the IRS has systems that flag mismatches automatically. In the UK, your records will soon sit next to the CARF data from your platforms. It’s better to find a gap yourself than to have HMRC find it first.
If an HMRC letter arrives, the video’s advice is not to panic and not to ignore it. These nudge letters are a prompt to review, not an investigation. Ignoring one is how a nudge becomes something bigger. If you find you missed something in earlier years, HMRC has a crypto asset disclosure service for correcting it. The video warns that in some cases HMRC can charge penalties of up to 100% of the tax due.
The last step is to take your map, folder and labeled records to a qualified advisor who understands crypto and the rules where you live. If stages 1 to 4 are done, the video says that meeting should be shorter, cheaper and less stressful.
The records routine from the video
The video ends with a simple template and routine:
- Keep one spreadsheet row per movement, each with one of the seven labels.
- Use one sheet per tax year.
- Update it once a quarter. The host estimates about 20 minutes.
- Download full exchange CSV files once a year.
- Screenshot every wallet and exchange balance at year end.
- Store the folder with an offline backup, never alongside your seed phrase.
The short version: map it, pull it, label it, price it, check it.
What to watch next
US holders should check whether their 2025 1099-DA forms show proceeds that match their own records, and make sure cost basis is entered on Form 8949. Extension filers face the October 15 deadline. UK holders should watch for HMRC’s letter wave running to March 2027 and the first CARF reports due by May 31, 2027. In both countries, remember that selling and swapping can both be taxable, and ask a qualified advisor before you act, not after.
Frequently asked questions
What is Form 1099-DA?
It is a new US form that exchanges use to report customers' crypto sales directly to the IRS. According to the video, it counts crypto-to-crypto trades in proceeds, not just sales for dollars.
Why is the cost basis box blank on my 1099-DA?
For 2025, the form shows what you sold for but not what you paid. The video says the IRS expects you to enter your own cost basis on Form 8949. From 2026 trades onward, exchanges start reporting cost basis, mainly for crypto bought and kept on the same exchange.
Is swapping XRP for another crypto taxable in the UK?
It can be. HMRC guidance lists exchanging crypto for a different crypto as one of four ways to dispose of it. The other three are selling, using it to pay for things and giving it away.
What should I do if I get an HMRC crypto nudge letter?
The video says not to panic and not to ignore it. Nudge letters are a prompt to review, not an investigation. HMRC has a crypto asset disclosure service for correcting earlier years.
Is moving XRP from an exchange to my own wallet a sale?
No. The video says a transfer to yourself isn't a sale. If it isn't labeled, though, it can look like coins disappeared from one place and appeared in another, which may not match what platforms report.
Education and commentary only, not financial advice. Crypto is volatile and you can lose money. Do your own research and speak to a qualified advisor before making investment decisions. Figures and quotes are as reported in the video on October 14, 2026 and may have changed since.
