What is cost basis in crypto, and how do you find it?

Crypto cost basis is the amount you are treated as having paid for a coin, and it is subtracted from the sale value to find your taxable gain or loss. Finding it means going back to how you acquired each unit. The rules below are those of the US Internal Revenue Service (IRS).

How do you find crypto cost basis?

Start with how the crypto arrived:

• Bought with dollars. Basis is the cash paid plus the costs of making the purchase. The IRS counts trading fees, gas fees, transfer taxes and commissions as such costs. Fees for moving coins between your own wallets do not count.
• Swapped from another coin. Basis is the fair market value of the new coin at the time of the swap.
• Received as pay or a reward. Basis is the dollar value when you received it, as long as that value was included in income.
• Received as a gift. Different rules apply, covered in is gifting crypto taxable.

Records usually live in exchange histories, bank statements and payslips. For self-custody wallets, a blockchain explorer shows dates and amounts, though not what you paid. The IRS expects you to keep records that support what you report.

What are FIFO and specific identification in crypto?

When a holding was bought at different prices, a rule decides which units were sold. FIFO, or first in, first out, treats the earliest units as sold first. The IRS applies it by default if you do not validly identify units.

Specific identification lets you choose units. For a wallet you control, you identify them no later than the sale, using details such as purchase date or price, and keep records. For crypto held with a broker after 2025, you identify units with the broker using its own process. If a broker offers only one method, that counts as a standing order.

What is wallet-by-wallet cost basis?

Since January 1, 2025, basis is tracked separately for each wallet or account.

Revenue Procedure 2024-28 gave a one-time safe harbor for the switch. It let taxpayers assign their remaining basis as of January 1, 2025 to the wallets holding those coins, either unit by unit or by a fixed rule. The allocation had to be completed by set deadlines tied to the first 2025 sale or the 2025 return, and it cannot be changed afterwards.

What if your crypto cost basis is missing?

It is common. On Form 1099-DA, brokers must report basis only for covered assets, generally ones bought after 2025 and kept in the same account. Coins bought earlier or transferred in are noncovered, and the broker may leave basis blank.

Coinbase says it uses a $0 basis for crypto sent from outside until the customer adds the real figures, and warns that the IRS may assume $0 if no basis is reported. Crypto tax software can help link transfers to original purchases.

Rules differ by country and change often. Check the tax authority or a qualified professional for your own situation.