Keep, for every unit you hold: which wallet or account held it, what you paid, the date and time you acquired it, what you received when you disposed of it, and evidence that moving a coin between your own wallets did not dispose of it. The part people underrate is timing. Almost none of that survives an exchange shutting down, so my rule is to capture each item on the day.
Part of our guide: Crypto Taxes.
The short version
- Digital assets are property in the IRS’s treatment (IRS), so an undocumented purchase price becomes your problem at sale.
- The IRS has published the exact four facts a record must show (Rev. Proc. 2024-28). The rest of any checklist produces them.
- Brokers now file Form 1099-DA about you: gross proceeds starting with 2025 trades, basis on certain 2026 ones. Your record has a counterparty.
- Document every self-transfer as a self-transfer. On-chain, a move into your own cold storage looks like a sale.
- Property records live until the period of limitations for the year of disposal expires, which for a long-held coin runs well past three years (IRS).
The five questions a record has to answer
Most crypto tax checklists inventory wallets, exchanges, and CSV exports, which tells you what to gather and nothing about whether it is enough. Sort by the question each record answers, and the gaps name themselves.
Rev. Proc. 2024-28, on what substantiates a specific identification of units, asks for a per-unit record kept at the level of one wallet or account, showing:
“(1) the date and time each unit was acquired; (2) the taxpayer’s basis and the fair market value of each unit at the time it was acquired; (3) the date and time each unit was sold, exchanged, or otherwise disposed of; and (4) the fair market value of each unit when it was sold, exchanged, or disposed of, and the amount of money or the value of property received for each unit.”
Four facts and a location:
That you owned it, and where. Every address, exchange account, and custodial account, with the person or entity it is titled to. Include the closed accounts and the emptied addresses, marked as such, so nobody later wonders whether the search finished.
What it cost. Publication 551 puts the burden on you to document everything that moves basis. For a purchase that is the confirmation, the fees, and the account. For staking rewards, airdrops, and forks, the amount taken into income becomes the basis, so one document carries both.
When the clock started. Acquisition date and time, per lot. It sets the holding period, and since January 1, 2025 it feeds the ordering rules that decide which units a disposition drew from.
That a movement was only a movement. Moving coins into cold storage, consolidating addresses, and rebalancing between accounts you control leave your tax position where it was, and on-chain all three look like a sale. Record both addresses, the hash, the date, and a note that both ends are yours. Where an LLC is involved, that note also keeps company positions distinct from personal ones.
What it was worth. Fair market value in US dollars, at receipt for income items and again at disposition, from a price source you can name.
Answer all five and the checklist is finished.
What changes for 2026 transactions
Through 2024 these records had one job: support the numbers on your own return. Brokers now report gross proceeds on Form 1099-DA for transactions on or after January 1, 2025, and basis on certain transactions on or after January 1, 2026. A second description of your year exists, written by somebody else, and Form 8949 reconciles the two.
The IRS has said in terms that they will diverge. Notice 2026-20 extends through December 31, 2026 the relief that lets a taxpayer record the lot choice internally rather than sending it to the broker:
“Consequently, for 2026 transactions, the acquisition date and basis reported by a broker to a taxpayer with respect to a sale, disposition or transfer of digital assets may not match the lot identification and basis of that sale, disposition or transfer on the taxpayer’s books and records.”
Two limits matter before leaning on it. The notice says the relief “does not apply to digital asset units not held in the custody of a broker,” so self-custody gets no accommodation. And the identification still has to be made no later than the date and time of the disposition, so a lot selection reconstructed the following spring fails as one.
Rev. Proc. 2024-28 left a related item open: its safe harbor allocates pre-2025 unused basis to a specific wallet or account, generally by the date of that asset’s first sale on or after January 1, 2025. A universal pool carried into 2025 without it leaves a gap under everything sold since.
How long the records have to live
The IRS default is three years, stretching to six where you fail to report income exceeding 25% of the gross income shown on the return, and running indefinitely with no return. The rule for a long-held crypto position sits below that list:
“Generally, keep records relating to property until the period of limitations expires for the year in which you dispose of the property.”
Digital assets are property. So the clock on an acquisition record does not start when you buy, and it does not start when you file that year’s return. It starts in the year you sell, which means a position bought in 2017 and sold in 2032 needs its 2017 confirmation legible in 2035.
That makes retention an archive problem. Fifteen years outlasts most exchange accounts, most file formats, and anyone’s memory of a login they stopped using. Save the statements themselves, and if you keep a data room for the estate, the tax file belongs inside it.
What I actually see
Three patterns, over and over.
The first is the record that reconciles only to itself: a tidy spreadsheet built in March from one portfolio tracker’s API pull, with no confirmation or statement behind any line of it.
The second is self-transfers booked as sales. A family moves holdings off an exchange into cold storage, the software reads each outbound transfer as a disposal at market, and the return reports gains on assets nobody sold. Correcting it means proving the receiving addresses were theirs, which takes a minute at the time and becomes an investigation three years later.
The third is the venue that stopped existing. Somebody traded between 2017 and 2020 on a platform that has since shut down or stopped serving US customers. The chain still shows deposits and withdrawals. Nothing shows what was paid, so basis for that tranche becomes a permanent estimate.
The check I would run before next filing season: take the latest statement from your largest exchange account and match every disposition on it to a line in your own record, including which lot you say was sold. Count the ones you cannot match. That count is your 2026 reconciliation problem, knowable now instead of in April.
Where this goes wrong
The records all exist, and software produced every one of them with nobody checking against a source document.
The specific failures: basis carried at a tracking tool’s default instead of a statement. A universal basis pool taken into 2025 with the wallet-by-wallet allocation never performed. Lot identifications written after the sale. Self-transfers reported as disposals. Airdrops and forks with no recorded date. Fees left out of basis going in and out of proceeds going out. And, in an entity or a trust, records living with whoever trades instead of whoever has to answer for the numbers.
The decision rule
- Inventory every wallet and account first, closed ones included, since nothing else has anywhere to attach.
- Capture the four facts at the transaction: acquisition date and time, basis, disposition date and time, value received.
- Record both addresses on every self-transfer, with the hash and a note that both ends are yours.
- Price every inbound receipt on the day it arrives, using one named source for staking rewards, airdrops, and forks alike.
- Make the lot identification before the disposition, and keep it where the date it was written is visible.
- Confirm the wallet-by-wallet basis allocation happened if you held a universal pool going into 2025.
- Reconcile against each broker statement as it arrives, settling differences inside the same tax year.
- Hold your own copy of every document a venue holds for you, in a format you can open in fifteen years.
Where this sits
Records sit downstream of every other decision and they are where those decisions get graded. Which return these numbers reach is a question of entity classification, covered in crypto tax reporting for LLCs. Custody decides who holds the source documents and whether you can get them back. Stablecoin activity sets how many reportable events exist. Inside a trust, a trustee who sells crypto answers for the tax treatment and for the decision behind it.
The join is where these fail. The attorney drafts the documents, the CPA prepares a return from whatever arrives in February, and whoever handles custody holds the only copy of the underlying data. Each does competent work against a partial picture, and nobody owns the question of whether the CPA’s file is the file an executor could find. Give that ownership to a named person.
Sources
- IRS, Digital assets
- IRS, How long should I keep records?
- IRS, Publication 551, Basis of Assets
- IRS, About Form 8949, Sales and Other Dispositions of Capital Assets
- IRS, About Form 1099-DA, Digital Asset Proceeds From Broker Transactions
- IRS, Revenue Procedure 2024-28
- IRS, Notice 2026-20
Related
- Crypto tax reporting for LLCs
- Crypto estate data room checklist
- Crypto custody for LLCs
- Can a Wyoming LLC stake crypto?
- Can an LLC hold stablecoins?
- Crypto tax and records
Last updated: 3 August 2026.
This article is general education, not legal, tax, or investment advice. Good records can reduce certain risks but do not eliminate them, and the right treatment of any transaction depends on your facts, your holdings, and your filing history. Talk to a qualified CPA about your own situation.
