6 Records Crypto Traders Should Keep to Survive an IRS Notice
Sam's List Editorial | 2026-06-23
6 Records Crypto Traders Should Keep to Survive an IRS Notice The IRS already knows you touched crypto. Every Form 1040 since 2020 opens with a yes-or-no digital asset question, right under your name and Social Security number. You checked the box, or you left it blank — and either answer is now a data point in their file. The notice, when it comes, is rarely an accusation. It's a request. The IRS computer matched a number it received against a number you reported, found a gap, and printed a letter. Whether that letter ends in a polite "thank you, case closed" or a five-figure assessment comes down to one thing: the crypto trader tax records you can produce on demand. Most traders can't produce them. They have a tangle of exchange exports, a wallet they stopped using in 2022, and a vague memory of a good year. Here are the six records that turn a scary letter into a non-event. 1. Cost basis in USD: the crypto trader tax record examiners check first Capital gains are sale price minus cost basis. If you can't prove basis, the IRS is allowed to treat it as zero — which means your entire proceeds get taxed as gain. That's not a hypothetical worst case. It's the default the examiner reaches for when your cryptocurrency cost basis records have holes. You bought 0.5 BTC at $30,000, sold it at $60,000, and owe tax on a $15,000 gain. With no basis record, you owe tax on the full $30,000. The number doubled because of missing paperwork. Record the USD value of each lot at the moment you acquired it — every buy, every swap, every coin received. Date, amount, and dollar value. A lot you can't price is a lot the IRS will price for you, badly. 2. A complete transaction history across every exchange and wallet Here's the pattern: gaps trigger notices. The IRS receives data from exchanges. When their total doesn't reconcile with yours, the letter prints itself. You probably traded across more venues than you remember. Coinbase, a DEX, a hardware wallet, that one app you used for three weeks during a hype cycle. Each one is a thread the IRS can pull. If your records cover four of five venues, the fifth is exactly where the discrepancy lives. This matters more every year. Brokers began reporting gross proceeds on the new Form 1099-DA for transactions starting in 2025, with cost-basis reporting phasing in for certain assets acquired on or after January 1, 2026. The reporting is rolling out in stages and the coverage is incomplete — assets you moved in from an outside wallet generally won't carry basis. Translation: the IRS will increasingly receive a proceeds number with...
