Quick answer
Accurate cost basis reporting is what separates a correct tax return from one that's audited — the purchase price is everything.
Reporting
Australia
Canada
United Kingdom
United States
Cost Basis Reporting
The requirement to report the original acquisition cost of crypto assets when calculating and disclosing capital gains to tax authorities.
AustraliaCanadaUnited KingdomUnited StatesUnderstanding Cost Basis Reporting on crypto
Cost basis reporting refers to the process of calculating, documenting, and disclosing the original acquisition cost of cryptocurrency for capital gains tax purposes. The cost basis is the starting point for every gain or loss calculation — errors in cost basis lead directly to errors in reported tax. For US taxpayers, Form 1099-DA (from 2026) will include broker-reported cost basis for some transactions. For most crypto investors, particularly those with DeFi activity or self-custody wallets, cost basis must be tracked manually or via tax software. The cost basis method chosen (FIFO, HIFO, specific ID) significantly affects reported gains.
Cost basis reporting refers to the process of calculating, documenting, and disclosing the original acquisition cost of cryptocurrency for capital gains tax purposes. The cost basis is the starting point for every gain or loss calculation — errors in cost basis lead directly to errors in reported tax. For US taxpayers, Form 1099-DA (from 2026) will include broker-reported cost basis for some transactions. For most crypto investors, particularly those with DeFi activity or self-custody wallets, cost basis must be tracked manually or via tax software. The cost basis method chosen (FIFO, HIFO, specific ID) significantly affects reported gains.
What this means for your crypto activity
Foundation of CGT
Correct cost basis is the single most important input in calculating accurate crypto capital gains.
Missing basis challenges
Missing cost basis (from lost records, airdrops, or transferred wallets) creates reporting challenges.
Form 1099-DA from 2026
From 2026, US brokers will report cost basis on Form 1099-DA for eligible transactions.
Self-custody tracking
Cost basis for self-custody wallets and DeFi positions must be tracked independently.
Zero basis default
If you cannot determine cost basis, the IRS may default to zero — resulting in the full proceeds being taxable.
- Correct cost basis is the single most important input in calculating accurate crypto capital gains.
- Missing cost basis (from lost records, airdrops, or transferred wallets) creates reporting challenges.
- From 2026, US brokers will report cost basis on Form 1099-DA for eligible transactions.
- Cost basis for self-custody wallets and DeFi positions must be tracked independently.
- If you cannot determine cost basis, the IRS may default to zero — resulting in the full proceeds being taxable.
Seeing it in action
Example scenario
Sarah bought ETH across 12 transactions on three different exchanges over two years. When she sells, her cost basis depends on which cost basis method she uses. Under FIFO, her oldest (cheapest) ETH is sold first — maximising her gain. Under HIFO, her most expensive ETH is matched — minimising her gain. The difference in reported CGT is $4,000. Accurate, consolidated cost basis records make this calculation possible.
How this works across jurisdictions
- Australia
Cost basis must be maintained for each CGT event; ATO may pre-fill some data from exchange reports.
- Canada
Adjusted Cost Base (ACB) method required for identical properties; average cost must be tracked.
- United Kingdom
Pooling rules mean cost basis is the Section 104 pool average — not individual lot tracking.
- United States
Cost basis reporting on Form 1099-DA from 2026 for broker transactions; taxpayer responsible for self-custody and DeFi cost basis; Form 8949 requires cost basis for each transaction.
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