How to determine your crypto cost basis for US taxes
You determine crypto cost basis by tracking what you paid plus costs, then reporting sales on Form 8949. The IRS treats crypto as property in the US.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
On this page
- The IRS treats cryptocurrency as property.
- Basis is your purchase price plus costs.
- Selling, swapping, or spending crypto can trigger tax.
- Income crypto basis is its value when received.
- Keep records at least three years after filing.
The IRS has treated cryptocurrency as property since 2014, so capital gains rules usually apply. Each taxable disposal needs a basis. Your records and method determine the reported gain or loss.
What Crypto Cost Basis Means
Your cost basis is the original value of the crypto plus what you paid to acquire it. The IRS treats crypto as property, so basis works like it does for stock. Subtract basis from proceeds to figure gain or loss.
What to Gather Before You Start
Gather records from every exchange and wallet. Rebuild missing data from provider statements and blockchain history. You need the date, amount, and US dollar value for each purchase and disposal.
How to Determine Your Cost Basis
A taxable event usually happens when you sell, trade, or spend crypto. Buying with dollars is not taxable. If you received crypto as income, your basis starts at the value when you got it.
- 1List every disposalWrite down each sale, trade, spend, or exchange. Trading one crypto for another usually is taxable.
- 2Match coins and choose methodFind the purchase records for the units you sold. Use FIFO or specific identification, and keep records for the method you choose.
- 3Use income value as basisFor mining, staking, or airdrops, basis is the value when received. That value is also income.
- 4Report and reconcileYour broker sends Form 1099-DA by mid February. List sales and basis on Form 8949, carry totals to Schedule D, and check the 1099-DA against your records.
After You Calculate Your Basis
Keep the documents that show how you calculated each basis. The IRS may ask you to support the numbers on your return. Good records help you reconcile a Form 1099-DA.
Frequently asked questions
No. A transfer between wallets you control is not a taxable sale or exchange. Keep the records to prove your basis later.
Rebuild them from exchange statements, wallet history, and blockchain data. If you cannot prove a basis, the IRS may treat it as zero.
Yes. The IRS allows specific identification if you identify the units sold and keep records. Without those records, FIFO usually applies.
