New Crypto Tax Guidance for 2027

The IRS has spent the past several years adding rules for digital asset reporting, cost basis, and broker reporting. Some of those changes are already in effect, while others will become more noticeable when taxpayers begin receiving 2026 tax forms in 2027.

The changes don’t replace the IRS’s existing rules for crypto income, gains, losses, transfers, and recordkeeping. Instead, they add a more detailed framework for tracking and reporting digital assets.

The IRS’s crypto guidance covers several questions that have caused confusion for taxpayers, including how hard forks and airdrops are taxed, whether taxpayers must use FIFO, whether transfers between their own wallets are taxable, and what records they need to maintain.

The guidance still does not answer every crypto tax question. For example, most cryptocurrency that is not treated as stock or securities for federal tax purposes generally is not subject to the traditional wash sale rule under IRC section 1091. Digital assets that are also stock or securities, including certain tokenized securities, can be subject to wash-sale disallowance.

See the IRS digital asset guidance for current federal reporting rules.

Several crypto reporting changes will become more visible in 2027 as taxpayers receive forms covering their 2026 activity.

Form 1099-DA will start showing cost basis for certain assets. Brokers must report basis for digital assets that are covered securities sold after 2025. Generally, a covered security is a digital asset acquired after 2025 in an account for which the broker provided custodial services and held there until the broker handled the disposition.

Basis may still be missing for noncovered assets. Brokers using optional reporting methods for qualifying stablecoins and specified NFTs also may not be required to report basis.

The Form 1099-DA instructions explain the basis-reporting rules in detail.

Backup withholding moves into its next phase. The IRS provided transitional relief from certain digital asset backup-withholding requirements for transactions during 2025 and 2026. Beginning in 2027, backup withholding may apply in more situations when a broker lacks the required taxpayer identification information, although additional transitional relief applies to certain customers.

See IRS Notice 2025-33 for the transitional rules.

The proposed DeFi broker reporting requirement is no longer coming in 2027. The rule would have required certain decentralized finance front-end providers to report digital asset sales. Congress overturned the regulation under the Congressional Review Act, and the President signed the resolution into law on April 10, 2025.

The IRS distinguishes between a hard fork that does not result in you receiving a new digital asset and one that does.

If a hard fork occurs but you do not receive new digital assets, you generally do not have taxable income from the fork. If you receive new digital assets and gain dominion and control over them, you generally recognize ordinary income equal to their fair market value when you receive them.

Dominion and control generally means you have the ability to transfer, sell, exchange, or otherwise dispose of the asset.

For example, if a hard fork creates a new token but your exchange does not yet support it, you may not have income until the exchange gives you the ability to control the new asset.

For more detail on receipt and control, see the IRS digital asset FAQs.

You can also read TokenTax’s guide to how crypto airdrops are taxed.

The IRS does not require you to use FIFO for every crypto disposal. You can use specific identification to determine which units were sold, exchanged, transferred, or otherwise disposed of if you meet the identification and recordkeeping requirements.

Under the current rules, specific identification and FIFO generally operate separately within each wallet or account. You cannot dispose of crypto from one wallet and simply assign the basis of unrelated units sitting in another wallet because they are the same digital asset.

For crypto held with a broker, you generally need to identify the units you are disposing of by the transaction date and time. A broker may also allow a standing instruction for selecting units. Through December 31, 2026, Notice 2025-7, as extended by Notice 2026-20, allows lot identification or a standing order in your books and records without necessarily communicating it to the broker. After that relief ends, specific identification or a standing order generally must be communicated to the custodial broker by the sale date and time using the broker’s identifiers; otherwise FIFO applies within that account.

If you do not make an adequate identification, FIFO generally applies to units of the same digital asset held in that account. That means the earliest acquired units are treated as the first units disposed of.

For crypto in a self-custody or unhosted wallet, you can make a specific identification in your own books and records no later than the date and time of the sale, disposition, or transfer. Your records must be detailed enough to establish which units left that wallet.

The IRS allows taxpayers to use identifiers such as the purchase date and time or purchase price, provided the records are sufficient to determine the basis and holding period of the units.

For more detail on choosing lots and calculating basis, see TokenTax’s crypto cost basis guide.

What records do you need for crypto-specific identification?

Keep records detailed enough to establish the basis and holding period of the units you identify. Depending on the transaction, those records can include:

• The date and time the units were acquired

• The acquisition cost and cost basis

• The wallet or account where the units were held

• The date and time of the sale, exchange, transfer, or other disposal

• The fair market value and proceeds at disposition

• The specific units or lot selected

For self-custodied assets, your records must also demonstrate that the identified units were actually removed from the relevant wallet.

The IRS’s older virtual currency FAQs, which generally apply to transactions before January 1, 2025, explain specific identification and FIFO in Questions 39–41. For transactions on or after January 1, 2025, use the current digital asset FAQs on specific identification and default FIFO within each wallet or account in Questions 82–92. Hard forks and airdrops are covered in Questions 104–107.

Transfers of crypto between wallets, addresses, or accounts that you own generally are not taxable events. The IRS confirms that moving virtual currency between your own accounts does not create income, gain, or loss, even if you receive an information return from an exchange or platform related to the transfer.

That doesn’t mean you can ignore the transaction. Your basis and holding period generally carry with the asset, and current basis rules operate on a wallet-by-wallet or account-by-account basis.

Accurately identifying transfers is therefore important so that the receiving wallet retains the correct tax history. Otherwise, a later sale could appear to have missing or incorrect cost basis.

For a broader explanation of taxable and non-taxable crypto activity, see TokenTax’s crypto tax guide.

The IRS requires taxpayers to maintain records sufficient to support the positions reported on their tax returns.

For crypto, those records can include transaction histories, acquisition dates, proceeds, cost basis, fair market values, transfers, wallet addresses, and records showing which units were specifically identified.

Good records are especially important under the wallet-by-wallet basis rules. If you move an asset between your own wallets, keep enough information to establish where the units came from and what basis and holding period moved with them.

The newer specific-identification rules also require taxpayers who use self-custody to maintain adequate records that establish which units were actually removed from the wallet.

TokenTax can import transaction histories from supported exchanges, wallets, and blockchains to help organize crypto tax records and calculate gains and losses.