Which Coins Did You Sell? IRS Relief for Exchange Accounts Ends Dec. 31

If you hold the same coin in an exchange account and bought it at different prices, the IRS wants to know which coins you sold. A temporary IRS rule lets you keep that choice in your own records for sales through Dec. 31, 2026. After that date, the choice has to go through your exchange.

Why the choice matters

In simple terms, your gain or loss on a sale is what you receive for the coin minus your cost. The IRS calls that cost your basis. It is generally what you paid, and it can also include costs such as fees. When you own several coins of the same kind, bought at different times, your basis depends on which coins count as sold.

Here is a made-up example that ignores fees to keep the math simple. In real life, fees can change both your cost and what you receive. You buy one coin for $100 in January and another for $300 in June. You later sell one coin for $400. If the January coin counts as sold, your gain is $300. If the June coin counts as sold, your gain is $100. The sale is the same, but the result is not. How long you held a coin also matters, because the IRS treats gains differently for coins held one year or less and coins held longer.

What the IRS says now

The IRS tracks coins one account or wallet at a time. For coins held at an exchange, which the IRS calls a broker, the normal rule is that you tell the exchange which coins to sell. You must do it no later than the date and time of the sale. A standing instruction can work, such as "sell the highest-cost coins first." If the exchange offers only one method, the IRS treats that method as your standing instruction. If you give no instruction, the oldest coins in that account count as sold first.

The IRS knew that some exchanges were not ready to take these instructions. In Notice 2026-20, it extended temporary relief through Dec. 31, 2026. Until then, you may instead write down which coins you sold in your own records, or record a standing order there. The timing differs. To identify particular coins, your record must name them no later than the date and time of the sale. A standing order recorded this way must be entered before the coins it covers are sold. Either way, your note must be specific enough to show the coins' cost and how long you held them.

The notice ends that relief on Dec. 31, 2026. For sales after that date, it says you cannot rely on it. Coins in a wallet you control yourself follow separate IRS rules, which also call for records made no later than the date and time of the sale.

What your exchange form will show

Under the IRS instructions, U.S. digital asset brokers, which generally includes exchanges, are required to report sales on Form 1099-DA. For 2025 sales, brokers reported proceeds. Starting with 2026 sales, they generally also report basis for "covered" coins. A covered coin was bought after 2025 and held in the same exchange account until it was sold. A coin bought before 2026, or moved in from another wallet or exchange, is "noncovered." The exchange is not required to report the basis for those coins, so you track it yourself.

There are exceptions. The instructions describe de minimis exceptions to reporting. They also describe an optional method that lets a broker skip basis reporting for qualifying stablecoins and specified NFTs, even when they are covered. So a form may show a sale without basis, or you may get no form for a small sale. Check what your exchange reports.

The IRS also warns that for 2026 sales, the dates and basis on an exchange form may not match the coins you named in your own records under the relief. If you made a proper identification, the notice says the coins you identified are the ones that count for your tax return, even when the form differs.

One exchange as an example

Coinbase's help page says its default cost method is first in, first out (FIFO), which means oldest coins first. It says customers can change the setting to highest in, first out (HIFO) or last in, first out (LIFO) for future transactions. It also says it uses Eastern Time to decide which tax year a trade falls in. Other exchanges may work differently, so check yours.

What does not change

• You must report taxable sales even if you get no form. The IRS says you report income, gain or loss from taxable crypto transactions whether or not you receive a statement.
• Moving coins between wallets or accounts you own is not a taxable event by itself. If you pay the network fee with crypto, though, using those coins for the fee counts as a disposal.
• The Form 1099-DA instructions say brokers should not report rewards and staking payments on that form. The IRS also tells filers to answer "Yes" to its crypto question if they received crypto from mining, staking or similar activity.

Questions to ask your exchange before Dec. 31

• Can I choose which coins I sell, and what happens if I do nothing?
• What details does it accept to name coins, such as purchase date and time or price? The IRS says the exchange picks the identifiers.
• Does it take standing instructions, and where do I set one?
• Which of my coins will show as covered or noncovered?
• Which time zone does it use for trades near midnight on Dec. 31?

Keep your own records of purchase dates, prices and transfers across every account and wallet. The IRS says you need records that support what you report.

What is still unknown

Notice 2026-20 sets Dec. 31, 2026 as the end of the relief. It does not promise more time. How each exchange will take instructions in 2027 is up to the exchange, and this article looks at only one exchange's help page. Your own tax result depends on your records and your situation.

Sources

• IRS Notice 2026-20: the relief period, the Dec. 31, 2026 end date, and the default oldest-first rule.
• IRS FAQs on digital asset transactions: wallet-by-wallet tracking, naming coins to a broker, transfers between your own wallets, fees paid in crypto, and reporting without a form.
• Instructions for Form 1099-DA: covered and noncovered coins, and how rewards and staking payments are handled.
• IRS digital assets page: the phase-in dates for proceeds and basis reporting, and the tax return question on crypto.
• Coinbase help page on Form 1099-DA: one exchange's default cost method, settings and time zone, as stated by the company.

Disclosure: This article is informational coverage based on the cited IRS documents and one company help page, read on Nov. 11, 2026. The $100, $300 and $400 figures are made-up examples. Tax rules depend on your facts, and the featured image is a generated illustration, not a photo. Ask a qualified tax professional or use the IRS guidance before you file. This article is not financial, legal, or investment advice. AI-assisted research and writing. Cited sources, not AI alone, support the claims.