Keep records before tax season

Record the event, not just the balance

A balance is the result of a history, and it is the history that reporting requires. For each event, preserve the date and time, the asset, the quantity, the type of transaction, the counterparty or a wallet label, the network, the transaction hash, the fees paid, the value in your local currency at the time, and the source document.

The local-currency value at the moment of the event is the field people most often fail to capture, and it is the hardest to reconstruct later—it requires knowing what the asset was worth at a specific timestamp, possibly years ago, on a venue that may no longer exist.

Export transaction history from every service before you stop using it. Accounts get closed, companies get acquired or fail, and export tools disappear. The cost of exporting today is a few minutes; the cost of reconstructing later can be considerable.

Classification matters

Different actions are treated differently in most systems. Buying with cash, selling for cash, swapping one asset for another, spending on goods, receiving income, receiving staking or mining rewards, receiving a gift, bridging between networks, and moving between wallets you control are not equivalent, and several of them can be taxable events even though no cash reached your bank.

Swapping is the one that surprises people most: exchanging one crypto asset for another is commonly treated as disposing of the first, even though the transaction feels like a single trade.

Moving assets between your own wallets is generally not a disposal, but it can look exactly like one in the records if only one side is documented. Label both sides at the time. An unlabelled outgoing transfer with no matching incoming record is indistinguishable from a sale.

Cost basis compounds if you neglect it

Cost basis—what you paid, including fees—determines gain or loss when you dispose of an asset. It has to be tracked per acquisition, and it becomes progressively harder to reconstruct as purchases accumulate across services and wallets.

Transaction fees generally form part of the basis or reduce the proceeds, so recording them is not optional bookkeeping. Network fees paid in a native asset can themselves be disposals of that asset in some systems, which is a level of detail worth confirming locally rather than assuming.

Use local guidance

The IRS treats digital assets as property, not currency, for U.S. federal tax purposes. Broker reporting on Form 1099-DA is phasing in: gross proceeds for transactions on or after January 1, 2025, and cost basis for transactions on or after January 1, 2026.

Note what that phasing implies: for a period, brokers report proceeds without basis, and the difference has to come from your own records. A form arriving from a platform is not a complete calculation, and it may not know about assets you transferred in from elsewhere.

Other jurisdictions differ, sometimes substantially, on whether swaps are taxable, how rewards are treated, and what holding periods apply. Check the current authority where you file, and use a qualified adviser for consequential questions.

• Capture local-currency value at the time of each event.
• Label both sides of every transfer between your own wallets.
• Export full history before closing any account.
• Track cost basis per acquisition, including fees.
• Confirm local treatment of swaps and rewards rather than assuming.