If you bought the same asset five times at five prices and then sold some, your taxable gain depends entirely on which units you are treated as having sold. That choice can be the difference between a large gain and a small loss, and the rules for making it have tightened considerably.
The practical consequence is that record keeping stopped being optional.
This is general information, not tax advice. Consult a qualified professional for your situation.
What changed in 2026
- Wallet-by-wallet tracking became the requirement. Basis must be tracked per account or wallet rather than pooled across all holdings, which changed how many people had been accounting.
- Broker reporting expanded. More transactions reported directly to tax authorities meant more matching against filed returns.
- Basis reporting phased in. Requirements for brokers to report cost basis, not only proceeds, began applying to more transaction types.
- Transfer gaps became visible. Assets moved between platforms frequently arrive without basis information, producing reported proceeds with no offsetting cost.
What a lot consists of
| Field |
Why it matters |
| Acquisition date |
Determines holding period and rate treatment |
| Quantity |
How much of the lot remains |
| Cost basis |
What you paid, including fees |
| Acquisition method |
Purchase, income, gift, or fork each have different basis rules |
| Location |
Which wallet or account holds it |
| Disposal records |
Date, proceeds, and which lot was sold |
The acquisition method row is where people go wrong. Assets received as income have a basis equal to their value when received and were taxable then. Assets received as a gift carry the giver's basis in some circumstances. Treating everything as if it were purchased produces wrong numbers in both directions.
Identification methods
Specific identification lets you choose which lots to sell, which is valuable — selling high-basis lots minimizes gain, selling low-basis lots realizes it deliberately when that is what you want.
The requirement is contemporaneous documentation. You must identify the specific units at the time of the transaction, not afterwards when preparing your return. Records made later, however accurate, generally do not qualify, and this is the detail that invalidates a lot of well-intentioned optimization.
Without valid specific identification, a default ordering applies, typically first-in-first-out. In a rising market that means selling your oldest and cheapest lots, which maximizes reported gain.
The transfer problem
Moving assets between your own wallets is not a disposal and produces no taxable event. It does move the basis, and platforms frequently do not transmit basis information with the transfer.
The result is common and unpleasant: you transfer holdings to a new platform, sell there, and the platform reports proceeds with no basis — so the entire proceeds appear as gain unless you can substantiate what you paid. Reconstructing that from years-old records across defunct exchanges is the tax problem people most regret not preventing.
Keep your own records independent of any platform. Export transaction history regularly, including from platforms you stop using, because access disappears when a service shuts down. Record transfers explicitly with the basis that moved.
The related question of whether losses can be harvested freely is in wash sales and crypto, and both interact with your overall position per capital gains tax explained.
Common mistakes
- Pooling basis across wallets. No longer the applicable method.
- Identifying lots after the fact. Does not qualify as specific identification.
- Relying solely on exchange exports. Missing basis for transferred-in assets.
- Treating income receipts as purchases. Wrong basis and a missed income event.
- Not exporting from platforms you leave. Records vanish when services do.
- Ignoring fees. They adjust basis and proceeds.
FAQ
What if I have no records for old holdings?
Reconstruct as best you can from bank records, blockchain history, and any exports available, and document your methodology. A zero basis is the worst-case default.
Does software handle this?
Tax software for digital assets helps considerably and depends on the completeness of the data you feed it. Gaps in transfers remain the hard part.
Are transfers between my own wallets taxable?
Generally no, and they must be recorded so basis follows the assets.
What about staking or similar income?
Typically taxable when received at then-current value, establishing basis for those units. Treatment varies by jurisdiction and activity type.
Where to go next
For loss harvesting rules, read wash sales and crypto. For general gain treatment, capital gains tax explained, and for decentralized activity, DeFi tax explained.