What basis is
When you buy crypto with dollars, your basis is the amount you spent, including fees, commissions and other acquisition costs. When you receive crypto as income, such as pay, staking rewards or an airdrop, your basis is its fair market value in dollars when you received it. Your gain or loss on a sale is the difference between what you get and that basis.
FIFO and specific identification
You may choose which units you sell, as long as you can identify them and show their basis. That is specific identification. You can identify a unit by its unique digital identifier, such as a private key, public key and address, or by records showing when each unit was acquired and sold, its basis and its value.
If you do not specifically identify units, they are treated as sold in chronological order, starting with the earliest unit: first in, first out.
Wallet-by-wallet tracking from 2025
From January 1, 2025, basis is tracked separately for each wallet or account rather than across everything you own. Rev. Proc. 2024-28 is a safe harbor for moving to this: you could allocate your unused basis from before 2025 to the units held in each wallet or account as of January 1, 2025, using either a specific-unit allocation or a global allocation rule.
The allocation had to be reasonable and made as of January 1, 2025. If you held crypto in more than one place before 2025 and have not documented an allocation, read the revenue procedure or ask a tax professional before you file.
Identifying units held at a broker, 2025 and 2026
For crypto held in a broker account, Notice 2025-7 gave temporary relief: instead of telling the broker, you can identify which units you sell in your own books and records by the time of the sale, or record a standing order (for example "highest cost first") in your own records before the sale.
Notice 2026-20, published in April 2026, extended this relief to cover January 1, 2025 through December 31, 2026. It does not apply to units held outside a broker, such as in your own unhosted wallet, and it does not change what the broker reports on Form 1099-DA.
Practical steps
- Export the full history of every exchange account and wallet.
- Mark transfers between your own wallets so they are not treated as sales.
- Choose your identification method, write it down, and apply it consistently.
- Crypto tax software can track basis per wallet: compare options in our software guide.