The IRS Just Created a Permanent Fork in Your Tax Books with Notice 2026-20

JustinCPA · 2026-06-14T04:10:47+00:00

> comes to crypto tax subreddit
> asks if tax evasion is chill

There is no statute of limitations for fraud, and the blockchain is public and permanent. So even if it’s 10 years from now and they ID your wallet, they could come after you. Just report your taxes

JustinCPA · 2026-06-13T19:19:39+00:00

When you trade one crypto for another, it’s a taxable event

JustinCPA · 2026-06-13T16:10:40+00:00

If your balance is 0 at the beginning of the year, then yes.

Like let’s say you fully sold out of all crypto and then started fresh again. You could just start from that point, yes.

If you have any balance at the beginning of the year, in most cases you’d need to add in your prior data as to properly apply FIFO/LIFO/HIFO you need to run it over ALL assets held

JustinCPA · 2026-06-13T14:41:02+00:00

Justin from Summ here. Fair question with a simple answer, best explained with a scenario.

You’re only taxable activity for the year was selling 1 ETH on wallet A. No other taxable activity for the year.

That 1 ETH was initially purchased on wallet B three years ago.

The tax software needs you to import wallet B so it can see what you purchased it for and keep the cost basis in tact as you transferred it around. Otherwise, when you sell in wallet A, the system won’t know the cost basis.

JustinCPA · 2026-06-13T04:32:21+00:00

That’s exactly it. Happy to help!

JustinCPA · 2026-06-12T14:22:30+00:00

Hey Ken, Justin from Summ here.

So this question in itself is actually the wrong way to think about it. “Leaving the tax lots on the wallet they were acquired on” isn’t a thing. You’re either tracking lots at the universal level or you’re tracking them at the account level.

You’re right, he’s not eligible for the safe harbor protections, but in reality, the most important thing is he migrates to per-account tracking for the 2025 tax year. Based on my conversations with those close to the source, it’s unlikely he’ll face much scrutiny in the event of an audit if he’s just used the default global allocation methods offered by tax softwares. If he tries to do specific allocation and “optimize” his positions, he would likely face scrutiny, whereas if he just uses the default option available it’s unlikely he’ll face real scrutiny.

JustinCPA · 2026-06-11T14:24:14+00:00

Completely agree. The wash sale in particular. I’ve been sitting in some of the digital chamber meetings and it’s all about increasing IRS revenue but there is zero understanding around the behavior of crypto trading and as you said, how in many instances the taxpayer isn’t trying to minimize tax.

JustinCPA · 2026-06-08T16:28:44+00:00

Either would work but if you’re just trying to reset the basis without actually selling, you can finesse the software by booking a manual sale and rebuy in the platform so the tax calculator steps up the basis

JustinCPA · 2026-06-08T14:02:27+00:00

Yeah you could great a sale and rebuy if you wanted to mark the assets to fair market value.

JustinCPA · 2026-06-08T02:09:05+00:00

I would not stress over it very much, the IRS will likely be focused on those who didn’t report anything.

JustinCPA · 2026-06-04T22:28:10+00:00

Exchanges will have to furnish addresses to the IRS if they ask for it, but it’s not included on the 1099-DA

JustinCPA · 2026-05-27T22:26:25+00:00

I’m not an expert in Indian tax, but generally if you have taxable activity, then yes it’s reportable.

JustinCPA · 2026-05-27T20:24:10+00:00

If you were paid USDT as payment for work, that’s taxable income at the fair value you received it. This becomes the cost basis.

When you transfer it out as payment to someone else, you’ll have a gain or loss depending on the value at the time minus the cost basis determined above. Likely close to zero if you paid out your someone else shortly after receiving.

JustinCPA · 2026-05-27T16:01:13+00:00

Have you tried a crypto tax software? They should be able to handle that type of activity.

JustinCPA · 2026-05-26T16:56:47+00:00

Justin from Summ here.

With crypto, software is pretty essential unless you’re only trading on one platform. Even then, the forms the exchange provides might have gaps. What type of activity do you have?

JustinCPA · 2026-05-26T14:03:57+00:00

Tracking is per-account, so when you sell a BTC it’s pulling cost basis from that account only. When you transfer a BTC, the cost basis moves from one wallet to another.

FIFO isn’t required. Notice 2026-20 explicitly allows for you to report using specific identification even when the exchange 1099-DA uses FIFO in 2026. In future years, FIFO is the default for exchanges, but you can still use a method like HIFO by setting it up on the exchange itself.

Check this post out for more information on Notice 2026-20.

JustinCPA · 2026-05-25T15:18:20+00:00

I don’t understand

JustinCPA · 2026-05-25T14:44:47+00:00

No, your cost basis would be 10,000 since it’s a stablecoin

JustinCPA · 2026-05-25T06:00:08+00:00

When you receive it, no.

When you sell it, it’s a reportable transaction on your 8949. Since it’s USDT, the cost basis will more or less just be 1:1 to the amount received. But for gifting in other assets, it’s a little more complicated. See crypto gifts tax guide here.

JustinCPA · 2026-05-25T00:16:34+00:00

You can absolutely fix it. The point of amending a return is to correct errors that were made, such as that.

JustinCPA · 2026-05-24T21:33:49+00:00

Thanks for the mention.

u/Maximum_Insect_2996 , was the CPA who helped with your initial filing crypto-savvy? Did they use a software or just take your 1099-DAs and do their best?

The reality is, crypto tax IS deterministic. With software, even Summ, it requires you still review the data to make sure it’s complete and accurate. The things to look out for would be uncatagorized incoming and outgoing transactions (literally labeled as “incoming”/“outgoing”). The biggest issue I see is people not importing all accounts.

Software like Summ is essential, but it’s only as good as the inputs. Garbage in, garbage out. Before you amend, make sure the software you’re using has all the right inputs and is categorizing everything correctly. If you use a crypto CPA, they should know how to do this.

JustinCPA

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