Glossary
Crypto tax glossary
Plain-English definitions for the terms you'll meet on your 1099-DA, Form 8949, and everywhere in between.
- Form 1099-DAIRS
- The information return crypto brokers file with the IRS reporting your digital asset sale proceeds, starting with tax year 2025.
- Cost basisCore
- What you originally paid for an asset, including fees. Your taxable gain is proceeds minus cost basis.
- ProceedsCore
- The amount you received when selling or exchanging an asset. This is what brokers report even when basis is unknown.
- Capital gain / lossCore
- The difference between proceeds and cost basis. Held over a year, it's long-term; a year or less, short-term — usually taxed at different rates.
- Form 8949IRS
- The IRS form listing each disposal line by line, including any adjustments to broker-reported figures.
- Schedule DIRS
- The summary form that carries your Form 8949 totals onto your tax return.
- Taxable eventCore
- An action that can trigger tax — selling crypto for cash, trading one coin for another, or spending crypto on goods.
- Non-taxable transferCore
- Moving crypto between wallets or accounts you own. No sale occurred, so no gain or loss is realized.
- FIFOMethod
- First In, First Out — the default lot-selection method: your earliest purchases are treated as sold first.
- HIFOMethod
- Highest In, First Out — sells the most expensive lots first, typically reducing current-year reported gains.
- Specific IdentificationMethod
- Choosing exactly which lots you sold. Requires records adequate to identify the specific units.
- Tax lotCore
- A batch of an asset acquired at one time and price. Selling draws down specific lots depending on your method.
- Tax-loss harvestingStrategy
- Selling positions at a loss to realize losses that can offset gains. Rules apply — see a professional.
- Wash saleStrategy
- Selling at a loss and rebuying a substantially identical asset shortly after. Treatment of crypto under wash sale rules is an evolving area — get current advice.
- Staking rewardsIncome
- Tokens earned for staking. Generally treated as income at fair market value when received; that value becomes their cost basis.
- AirdropIncome
- Free tokens distributed to wallets. Typically income at fair market value on receipt.
- Hard forkIncome
- A blockchain split that can create new tokens in your wallet, potentially a taxable income event.
- DeFiEcosystem
- Decentralized finance — swaps, lending, liquidity pools. Each interaction can create taxable events that no broker reports.
- NFTEcosystem
- Non-fungible token. Buying, selling, and minting NFTs create disposals and acquisitions with their own cost basis.
- BridgingEcosystem
- Moving assets between blockchains. Usually a transfer of your own assets, but wrapped-asset mechanics can complicate treatment.
- Read-only APISecurity
- Exchange access that can view history but cannot trade or withdraw. It's how Basisfyle connects to your accounts.
- Audit trailProduct
- A line-by-line record explaining every adjustment between broker-reported figures and your reconciled return.
Definitions are general information, not tax advice.