How to document why you bought a token
To document why you bought a token, write a dated note before or right after the trade and file it with the details, wallet, hash and cost basis records.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
On this page
- Gather date, token amount, price, exchange, wallet, and hash before you write.
- Write your reason right after the trade, not when you sell.
- Keep the link or post that led to the buy with the note.
- File the note with cost basis records because the IRS treats crypto as property.
- Back up records and secure the account with two-factor authentication.
You will gather the trade confirmation while it is open, write down your reason, and store both together. The process takes a few minutes per purchase and saves guesswork at tax time.
What do I need before I start?
Pull these details from the trade confirmation or your account history. An exchange trade happens off the blockchain, so the account history is your record. For an on-chain swap, the transaction hash is the proof.
How do I document the purchase?
Write the dated note before you buy or right after the trade fills. A sentence or two about your reason is enough. Add the link or post that led to the buy and the date you saw it.
- 1Write the date and reasonPut today's date at the top and explain why you bought the token. Waiting until you sell makes the reason harder to recall.
- 2Save the link or postCopy the link or post that led to the buy and note the date you saw it. Keep it with the note.
- 3Add the trade detailsPaste in the date, token amount, price, exchange, and wallet address from your checklist.
- 4Add the transaction hashFor an on-chain purchase, the hash ties the transaction to your wallet. For an exchange buy, the account history does that job.
What should I do after buying?
File the note with your cost basis and tax records. The IRS treats cryptocurrency as property, so the date, amount, and price support your gain or loss later.
Frequently asked questions
Your wallet keeps an activity history. Export that history and file it with your dated note and the transaction hash.
Yes. The IRS generally treats airdrop and fork tokens as ordinary income at fair market value when you receive them. Write a dated note with the date and value.
Keep the note in encrypted storage on your computer, not on the device itself. Back it up separately from your recovery phrase.
Download your transaction history while the account still works. Your note and the confirmation can show the purchase later.
