Updated 2026-09-26
If you sold, traded, or spent cryptocurrency during the tax year, the IRS expects you to report each disposition on Form 8949, Sales and Other Dispositions of Capital Assets. Totals flow to Schedule D and onto Form 1040. This article walks through the form line by line, explains the digital-asset boxes, and provides a complete worked example: a purchase, a crypto-to-crypto trade, and a final sale.
General information only. This article explains federal rules as of September 2026. It is not personalized tax advice. For your situation — especially high volume, mining income, gifts, theft losses, or foreign accounts — consult a CPA, enrolled agent, or tax attorney and refer to IRS.gov.
What Triggers a Form 8949 Line
Since Notice 2014-21, the IRS treats cryptocurrency as property, not currency. Every disposition is a taxable event. For crypto, these generate a Form 8949 line:
- Selling crypto for U.S. dollars (or any fiat currency)
- Trading one cryptocurrency for another (e.g., BTC → ETH)
- Swapping into or out of a stablecoin (e.g., BTC → USDC)
- Using crypto to pay for goods or services
What does not create a Form 8949 line: - Buying crypto with dollars - Transferring crypto between your own wallets (unless you pay the fee in crypto — that fee is a disposition) - Holding without any transaction
The digital asset question on Form 1040 page 1 asks whether you received, sold, exchanged, or disposed of any digital asset. "Yes" only flags that Form 8949 may be required.
Which Box Do I Check? The Digital Asset Boxes (G, H, I, J, K, L)
The 2025 Form 8949 instructions reserve specific checkboxes for digital assets. Do not use Box C (short-term) or Box F (long-term) for crypto. Instead:
| Holding Period | Box | When to Use |
|---|---|---|
| Short-term (≤ 1 year) | G | Broker reported proceeds and cost basis to the IRS |
| Short-term (≤ 1 year) | H | Broker reported proceeds but not cost basis to the IRS |
| Short-term (≤ 1 year) | I | No Form 1099-DA received |
| Long-term (> 1 year) | J | Broker reported proceeds and cost basis to the IRS |
| Long-term (> 1 year) | K | Broker reported proceeds but not cost basis to the IRS |
| Long-term (> 1 year) | L | No Form 1099-DA received |
Form 1099-DA timeline: Brokers report gross proceeds for transactions from January 1, 2025, and cost basis for certain transactions from January 1, 2026. The IRS grants good-faith penalty relief for 2025 and 2026 filings.
Practical implication: A crypto asset bought before 2025 and sold in 2026 will likely show proceeds but no cost basis on the 1099-DA (Box K for long-term, Box H for short-term). You supply the basis from your records.
Form 8949 Columns — What Goes Where
| Column | What to Enter |
|---|---|
| (a) Description | Full name or symbol (e.g., "0.10 BTC"), exact units disposed of, and sale transaction ID if available |
| (b) Date Acquired | MM/DD/YYYY — the date you originally acquired the specific units being sold |
| (c) Date Sold or Disposed | MM/DD/YYYY — the date of the disposition |
| (d) Proceeds | Gross proceeds in USD, net of any selling fees (what you received) |
| (e) Cost or Other Basis | Your cost basis in USD for the units disposed of (what you paid, including acquisition fees) |
| (f) Code | Leave blank unless adjusting a basis the IRS already has (see "Code B" below) |
| (g) Adjustment | Adjustment amount if using Code B; otherwise blank or -0- |
| (h) Gain or Loss | (d) minus (e) plus/minus (g); positive = gain, negative = loss |
Code B — Correcting a Wrong Basis on a 1099-DA
If you received a 1099-DA that reported a basis to the IRS (Box G or J) and that basis is incorrect:
- Enter the reported (wrong) basis in column (e)
- Enter Code B in column (f)
- Enter the adjustment (correct basis minus reported basis) in column (g)
If the 1099-DA did not report basis to the IRS (Box H, I, K, or L), do not use Code B. Enter your correct basis in column (e) and -0- in column (g).
Complete Worked Example
Scenario
Taxpayer: Single filer, U.S. resident
Tax Year: 2026 (filing early 2027)
Tracking: Specific identification at time of sale
Cost Basis: Wallet-by-wallet per Rev. Proc. 2024-28 (effective Jan 1, 2025)
Transaction History
| Date | Action | Details | USD Value | Fees | Notes |
|---|---|---|---|---|---|
| 03/15/2025 | Buy | 0.50 BTC | $32,000 | $50 | Lot A — acquired 03/15/2025 |
| 08/20/2025 | Trade | 0.25 BTC → 8.50 ETH | $16,500 | $30 | Lot A partial; 8.50 ETH received (Lot B) |
| 01/10/2026 | Buy | 2.00 ETH | $6,800 | $20 | Lot C — acquired 01/10/2026 |
| 09/05/2026 | Sell | 5.00 ETH → $18,500 | $18,500 | $40 | Specific ID: 3.00 ETH from Lot B, 2.00 ETH from Lot C |
Step 1: Holding Periods and Basis per Lot
| Lot | Asset | Units | Acquired | Cost Basis (incl. fees) | Cost/Unit | Holding Period |
|---|---|---|---|---|---|---|
| A | BTC | 0.50 | 03/15/2025 | $32,050 | $64,100/BTC | N/A (partial) |
| B | ETH | 8.50 | 08/20/2025 | $16,530 | $1,944.71/ETH | Long-term after 08/20/2026 |
| C | ETH | 2.00 | 01/10/2026 | $6,820 | $3,410/ETH | Short-term before 01/11/2027 |
Basis on crypto-to-crypto trade: Trading 0.25 BTC for 8.50 ETH disposes of BTC (taxable) and gives ETH a new basis = FMV of ETH received ($16,500) + fee ($30) = $16,530 for 8.50 ETH. The BTC disposition is reported separately on Form 8949.
Step 2: Form 8949 Rows
Transaction 1: Crypto-to-Crypto Trade (BTC → ETH) on 08/20/2025
Disposition of 0.25 BTC from Lot A (held ~5 months → short-term).
| Column | Value |
|---|---|
| (a) Description | 0.25 BTC |
| (b) Date Acquired | 03/15/2025 |
| (c) Date Sold | 08/20/2025 |
| (d) Proceeds | $16,500 (FMV of 8.50 ETH) |
| (e) Basis | $16,025 (0.25 × $64,100) |
| (f) Code | (blank) |
| (g) Adjustment | (blank) |
| (h) Gain | $475 (short-term) |
Box: H (short-term, no basis reported to IRS for 2025 trade).
Transaction 2: Sale of 5.00 ETH on 09/05/2026 — Specific ID
Lot B: 3.00 ETH from 08/20/2025 trade (held ~1 yr 16 days → long-term)
Lot C: 2.00 ETH from 01/10/2026 purchase (held ~8 months → short-term)
Net proceeds: $18,500 − $40 = $18,460
Allocated pro-rata:
- Lot B (60%): $11,076
- Lot C (40%): $7,384
Row 2a — Lot B (Long-Term)
| Column | Value |
|---|---|
| (a) | 3.00 ETH |
| (b) | 08/20/2025 |
| (c) | 09/05/2026 |
| (d) | $11,076 |
| (e) | $5,834.13 (3.00 × $1,944.71) |
| (f) | (blank) |
| (g) | (blank) |
| (h) | $5,241.87 (long-term) |
Box: K (long-term, proceeds reported, no basis to IRS).
Row 2b — Lot C (Short-Term)
| Column | Value |
|---|---|
| (a) | 2.00 ETH |
| (b) | 01/10/2026 |
| (c) | 09/05/2026 |
| (d) | $7,384 |
| (e) | $6,820 (2.00 × $3,410) |
| (f) | (blank) |
| (g) | (blank) |
| (h) | $564 (short-term) |
Box: H (short-term, no basis reported to IRS).
Step 3: Schedule D Totals
| Schedule D Line | Amount | Source |
|---|---|---|
| Line 1a (Short-term, Box H) | $475 + $564 = $1,039 | Transactions 1 + 2b |
| Line 8a (Long-term, Box K) | $5,241.87 | Transaction 2a |
| Line 16 (Net short-term gain) | $1,039 | |
| Line 17 (Net long-term gain) | $5,241.87 | |
| Line 18 (Total net gain) | $6,280.87 | Flows to Form 1040 Line 7 |
Tax impact (illustrative, 2026 brackets for single filer): - Short-term $1,039 at ordinary rate (e.g., 22% bracket) → ~$229 - Long-term $5,241.87 at 15% (income $49,450–$545,500) → ~$786 - Total federal tax on crypto gains: ~$1,015 (plus 3.8% NIIT if MAGI > $200,000; plus state tax where applicable)
Reminder: The $3,000 capital loss deduction limit and carryforward rules apply if you have net losses. Losses offset gains first without limit.
À retenir
- Every disposition gets a line — sales, crypto-to-crypto trades, stablecoin swaps, spending crypto.
- Use the digital asset boxes (G, H, I, J, K, L) — never Box C or F for crypto.
- Specific identification must be done at the time of sale, documented, and communicated to your broker if possible. Default is FIFO wallet-by-wallet since Jan 1, 2025.
- Basis from your records is what matters. If the 1099-DA is wrong or missing basis, you correct it on Form 8949 (Code B if basis was reported to IRS; your own basis in (e) with -0- in (g) if not).
- Holding period counts from the day after acquisition through the day of disposition. One day makes the difference between 15% and 37%.
- Keep a transaction log from day one: date, asset, units, USD value, fees, wallet, transaction ID. The tracking spreadsheet included with Crypto, Block by Block exports a clean file for your tax software or CPA.
About Crypto, Block by Block
Crypto, Block by Block (Book 1 of the collection) walks you through buying, storing, using, and reporting cryptocurrency in the United States with plain-English explanations and a ready-to-use tracking spreadsheet. The U.S. edition covers the 2025–2026 rules including Form 1099-DA, wallet-by-wallet cost basis, and the digital asset question on Form 1040. Available on Amazon at https://www.amazon.com/dp/B0HL2869BW and the edition page at https://cryptoblocparbloc.pages.dev/us/.
Sources (Official Texts)
- IRS Notice 2014-21 — Crypto as property: https://www.irs.gov/filing/digital-assets
- IRS Form 8949 Instructions (2025) — Digital asset boxes G, H, I, J, K, L and Code B: https://www.irs.gov/instructions/i8949
- IRS Schedule D Instructions (2025): https://www.irs.gov/instructions/i1040sd
- Rev. Proc. 2025-32 — 2026 long-term capital gains thresholds: https://www.irs.gov/irb/2025-45_IRB
- Rev. Proc. 2024-28 — Wallet-by-wallet cost basis safe harbor: https://www.irs.gov/pub/irs-drop/rp-24-28.pdf
- IRS Topic No. 409 — Holding period, rates, loss limits: https://www.irs.gov/taxtopics/tc409
- IRS Final Regulations on Broker Reporting (Form 1099-DA): https://www.irs.gov/newsroom/final-regulations-and-related-irs-guidance-for-reporting-by-brokers-on-sales-and-exchanges-of-digital-assets
- IRS Net Investment Income Tax: https://www.irs.gov/individuals/net-investment-income-tax
- IRC § 1091 (wash sale rule) — text: https://www.law.cornell.edu/uscode/text/26/1091
- H.R. 9172 (119th Congress) — Wash sale extension to digital assets: https://www.congress.gov/bill/119th-congress/house-bill/9172/text
All figures and rules reflect federal law as of September 2026. State tax rules vary; consult your state department of revenue.
Frequently asked questions
Do I need to report every crypto trade on Form 8949?
Yes. Each disposition — selling for cash, trading one crypto for another, or using crypto to buy goods — gets its own line on Form 8949. The IRS treats crypto as property, so every exchange is a taxable event.
What if my 1099-DA shows the wrong cost basis?
Enter the basis from the 1099-DA in column (e), put code B in column (f), and put your correction in column (g). If no basis was reported to the IRS, enter your correct basis in column (e) and -0- in column (g).
How do I know if my gain is short-term or long-term?
Count from the day after you acquired the units through the day you disposed of them. More than one year is long-term (0%, 15%, or 20% federal rate); one year or less is short-term (ordinary rates up to 37%).
General information, not tax or investment advice: for your own situation, ask the tax authority or a professional.