Lands on Schedule D — Form 8949 — basis per wallet or account, not per pool
If all your coins sit in one account and have never moved, this article is not for you — one account is already one pile, and the rules below change nothing. This is for anyone with an exchange account and a wallet, or two exchanges, or coins that have travelled between them.
For years a common way to keep crypto records was to treat everything you owned as one pile. Coins on an exchange, coins in a hardware wallet, coins in a phone app — one pile, and when you sold, you chose which units from the pile you had sold.
That stopped on 1 January 2025. The IRS now starts from where the coin was held, and the form your exchange sends follows the same rule.
The short answer
| The old habit | One pool across every wallet — the "universal" or "multi-wallet" approach |
|---|---|
| The rule since 1 January 2025 | Identification within each wallet or account |
| You say nothing to your exchange | It reports the earliest units in that account first |
| Basis on the 1099-DA | Only for covered units: bought in that account after 2025 and held there until sold |
| Coins moved out and back | Not covered — the broker need not report their basis |
| Coins transferred in | May be treated as acquired on the transfer date |
| The transition safe harbor | Tied to your 2025 return — closed for most people |
The pile you thought you had
Revenue Procedure 2024-28 describes the old habit precisely. Many taxpayers had read the IRS's earlier FAQs as allowing specific identification or first-in, first-out "based on a so-called universal or multi-wallet approach", because the FAQs did not "explicitly limit the specific identification or FIFO rule to units held within a single account, wallet, or address."
It is an understandable reading, and it was widely built into software. It is also not how the rules work now.
The rule since 1 January 2025
The final regulations "apply the specific identification or FIFO rules to units held within a single wallet or account", and:
"Section 1.1012-1(h) and (j) of the 2024 final regulations will apply to all acquisitions and dispositions of digital assets on or after January 1, 2025."
Each wallet or account is its own pile now. When you sell from one, the units sold — and so the basis — come from that one.
Here is what that does. The prices are illustrative:
| Units | What you paid | |
|---|---|---|
| Exchange account | 1 coin | $20,000, bought in 2021 |
| Hardware wallet | 1 coin | $60,000, bought in 2024 |
You sell one coin on the exchange in 2026 for $100,000.
| Method | Basis used | Gain |
|---|---|---|
| One pool, choosing the dearer coin | $60,000 | $40,000 |
| Wallet by wallet — the exchange only holds the cheaper one | $20,000 | $80,000 |
Same coins, same sale, twice the gain — because the coin that was sold was the one on the exchange, and the dearer one was never there.
What your exchange does if you say nothing
For coins left in an exchange's custody, the Form 1099-DA instructions tell the broker what to report:
"If no identification is provided at or prior to the time of the sale, you generally must first report the sale of the earliest units of the digital asset purchased by the customer."
The earliest units in that account, first. If that is not what you want, the identification has to be made at or before the sale — through whatever method your exchange offers for choosing lots. Deciding in March which coins you sold last August is not identification.
Why moving coins off an exchange changes the form
The basis box on a 1099-DA is required only for covered units, and the instructions define them narrowly:
"A digital asset is a covered security only if it was acquired in an account for which the broker provided custodial services and was held in that account until the broker effects the disposition of the digital asset."
Covered status starts with digital assets "acquired after 2025". And it holds only while the coin stays where it was bought. Move it to your own wallet and back, and it was not held in the account until the sale — so the broker is not required to report what you paid, and the gap is yours to fill.
Coins arriving in an account have a second problem. Unless the broker takes your own acquisition information into account, it is told to:
"treat digital assets transferred into the customer's account as acquired as of the date and time of the transfer."
And even when it does take your information, "brokers may use customer-provided acquisition information solely for lot-selection purposes and not for reporting basis or acquisition dates." The form will show the units transferred in and the transfer-in date in boxes 12a and 12b. What you actually paid, and when, still comes from your records.
The move between your own wallets is not a sale — unless you pay the network fee in crypto, which is a disposal of its own.
Your records and the form will disagree
The IRS saw this coming. Revenue Procedure 2024-28 records the concern, raised in comments before the rules were final, that the change from the universal approach "could lead to ongoing discrepancies between a taxpayer's basis records and the basis reported to the taxpayer by brokers on Forms 1099-DA."
When they disagree, the job is to reconcile, account by account — not to adopt either number blindly. Form 8949 is where the amounts reported to you and the ones you report are brought together.
The transition that is closing
Revenue Procedure 2024-28 gave holders a safe harbor to allocate their existing basis to the wallets and accounts that held their coins as of 1 January 2025. It applies only to units held on that date, and not "to any digital assets acquired by or transferred to the taxpayer on or after January 1, 2025."
Its deadlines are tied to 2025. A specific allocation had to be completed before the earlier of your first sale, disposition or transfer of that type of coin on or after 1 January 2025, and the due date — including extensions — of your 2025 return. A global method had to be described in your records before 1 January 2025.
For most people who have traded since then, it has passed. If you held a coin on 1 January 2025, have not sold or moved any of that coin since, and your 2025 return is on extension, it may not have — and that is a conversation to have with a qualified tax professional now, not after the extended due date.
What to keep
- A ledger per wallet and per account, not one for everything: units, what you paid, and when, for each.
- Every transfer, with the units and the basis that travelled with them. The receiving exchange may date them to the transfer; your record is what dates them to the purchase.
- Your lot choice, made before each sale, in whatever form your exchange accepts.
- Each 1099-DA reconciled against that account's ledger, not against a single total.
The pile was a convenience. The wallet is now the unit the rules count in.
Common questions
What was the multi-wallet method?
What replaced it?
If I don't tell my exchange which coins to sell, which does it use?
When will my 1099-DA show my cost basis?
What happens if I move coins to my own wallet and back?
How does the exchange date coins I transfer in?
Why will my own records and the form disagree?
Is there still a way to move old basis into the right wallets?
Does moving coins between my own wallets count as selling?
This article is for educational purposes only and does not constitute tax, legal, or financial advice. Consult a qualified tax professional about your situation.