The Basisfyle blog
Practical writing on the new era of crypto tax reporting.
Missing cost basis: why your gains look bigger than they are
Here is the quiet problem inside the new 1099-DA system: brokers can only report what they know. When you move coins onto an exchange and later sell them there, the exchange knows your proceeds to the cent — but it may know nothing about what you originally paid.
On the form, that gap often shows up as blank or zero cost basis. And a zero-basis sale looks, mathematically, like pure profit. Sell $50,000 of Bitcoin you bought years ago for $38,000, and an incomplete form can imply a $50,000 gain instead of a $12,000 one.
The fix is reconciliation: assembling your complete transaction history across every platform and wallet, matching each disposal back to its real acquisition, and documenting the adjustment on Form 8949. It's tedious by hand — a single active year can involve thousands of matches — which is exactly the job reconciliation software was built for.
Three practical takeaways: keep records of every purchase, including ones on platforms you've since left; never assume the broker's basis field is complete; and when your return differs from a broker form, make sure the difference is documented, not just asserted.
Tax-loss harvesting for crypto: a practical 2026 playbook
Tax-loss harvesting is the practice of selling positions that are down to realize losses, which can offset realized gains. In a volatile asset class, the opportunities can be significant — but only if you can actually see them.
That's the catch with fragmented crypto portfolios: a losing position sitting in a wallet you rarely open never appears on any broker form. It doesn't count until you realize it, and you won't realize it if you've forgotten it exists. A unified view of every holding across exchanges, wallets, and chains is step one.
Step two is timing and rules. Loss treatment interacts with holding periods, and the application of wash-sale principles to digital assets has been an evolving area — before executing a harvesting plan, confirm the current rules with a tax professional. Software can surface the candidates and compute the potential impact; the judgment call about your situation belongs with you and your advisor.
Step three is documentation. Every harvested loss should trace cleanly to a lot with a known basis and date, so the numbers on your Form 8949 hold up if anyone asks.
Wallet transfers are not sales — but your paperwork has to prove it
Moving crypto from an exchange to your hardware wallet is not a taxable event. You still own the same asset; nothing was sold. Yet in a fragmented reporting system, that movement is one of the most common sources of phantom gains.
Why? Because an exchange sees coins leave and a blockchain sees coins arrive, and nothing automatically links the two as the same person's assets. If your records treat the outflow as a disposal, you've just invented a sale — often at a moment when the price was up, creating a gain that never happened.
The protection is transfer matching: linking withdrawals and deposits across your own accounts by asset, amount, and timing, and carrying the original cost basis along with the coins. Done right, your basis survives the move intact, and the eventual real sale is taxed on the true gain. Done wrong — or not at all — you can end up paying tax on money you never made.