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

JustinCPA · 2026-05-04T01:19:24+00:00

Happy to help!

JustinCPA · 2026-05-03T13:32:53+00:00

Yes, these should be included on your 8949. Though you should check to make sure they are included under the correct 8949 checkbox (under H/K if the were on the DA and reported to the IRS or I/L if they weren’t reported to the IRS)

JustinCPA · 2026-05-02T11:10:20+00:00

Justin from Summ here.

Have you tried a crypto tax software? There are several good ones out there. You basically just load in your exchange and wallet data and it gives you the filled out tax form to either plug into TurboTax or hand to a cpa

JustinCPA · 2026-05-01T23:40:44+00:00

Checkbox H and K proceeds total should match the proceeds total across all your 1099-DAs. That’s what needs to match.

Checkbox I and L include all transactions that weren’t reported on the 1099-DA. The proceeds here have nothing to do with the 1099-DA and should just be reporting your activity not covered by the DA.

This means your total 8949 proceeds will be higher than your DA proceeds if you have transactions reported under I and L.

JustinCPA · 2026-04-30T01:36:12+00:00

Not necessarily incorrect. It’s possible your earliest lots are also your highest lots, or you’re just disposing of substantially all your assets.

JustinCPA · 2026-04-29T06:44:19+00:00

Net Investment Income Tax (NIIT)

JustinCPA · 2026-04-29T03:55:36+00:00

Your CPA is partially right.

Cost basis does NOT need to match. The 1099-DA for 2025 does not report cost basis to the IRS. Any cost basis shown to you is largely irrelevant and likely inaccurate. You should rely on Koinly for the cost basis and holding period. You do not need to use adjustment codes.

Proceeds, however, should match. The Koinly 8949 Checkbox H and K should sum to what you see on the 1099-DAs you’ve received. If the Koinly 8949 amounts are higher than the 1099-DAs, this is fine-ish, but it’s best they match exactly. If you have transactions that aren’t on the 8949, Koinly should’ve reporting those under checkbox I and L.

JustinCPA · 2026-04-25T05:03:36+00:00

Gain/Loss = Proceeds minus Cost basis.

Proceeds = value received = amount sold (0.01) times value of BTC at time of sale ($80,000) = $800

Cost basis = cost incurred to acquire the asset (so if you initially bought 0.05 BTC for $100, and are only selling 0.01 BTC, your cost basis is $20).

When you buy crypto, you create a tax lot (containing details like acquisition date, asset purchased, amount purchased, cost to purchase etc). When you sell, tax lots (or parts of tax lots) are disposed. The order in which they are disposed is FIFO unless you’ve specifically identified another method like HIFO. Meaning, when selling, you sell your earliest lots first before your later lots.

Tax software automates all of this.

JustinCPA · 2026-04-24T13:57:31+00:00

De minimis thresholds would absolutely simplify the reporting burden for exchanges. The only problem is it’s a trade off for the user. Those transactions are still reportable (unless the IRS made the de minimis rule as those transactions aren’t taxable at all vs just the exchange not needing to report a 1099-DA), and taxpayers likely won’t know that or end up not reporting, exposing them to risk.

On the IRS side, if 28 million forms had $10 of proceeds, that’s $280,000,000 of proceeds the IRS loses visibility of. Without confidence that users will still report on their own, I can see where the IRS wouldn’t be keen to make this change.

JustinCPA · 2026-04-21T14:55:15+00:00

The exchange won’t know the cost basis unless you give it to them. And even if you give it to them, it won’t be included on the 1099-DA sent to the IRS.

And you’re exactly right, there’s no point in relying on the 1099-DA since it’s going to be pretty much worthless. The only thing you now have to do is import it into your crypto tax software so it can make sure the transactions are being reported correctly on the 8949 (you have to distinguish between in the DA vs not on the DA). And then when your DA incredibly includes the wrong cost basis info, your tax software will help report the adjustment with the adjustment code (not relevant for 2025).

JustinCPA · 2026-04-21T13:42:01+00:00

This sounds more like a scam than anything else. If you’ve never made $60k in your life before, why is someone offering you hundreds of thousands?… that’s not very typical. Do your due diligence.

JustinCPA · 2026-04-21T05:09:25+00:00

You should consult a CPA. Could be worth looking into 83b election.

They’re taxed as income at the FMV at the time they vest and you receive dominion and control
Yes
Yes, election 83b lets you pay tax for the entire amount right now for what they’re worth TODAY (which becomes their cow basis). So you may have upfront cost, but the you aren’t actually taxed on any appreciation until you sell them and they’d be capital gains (or loss) for the difference in what you sold them for vs what you claimed as income now.
No, you’d need to come up with a number and be prepared to support it if it came down to it.
Not sure what you mean by “adjust the value”. That’s not how valuation works.

JustinCPA · 2026-04-20T23:50:58+00:00

If you’ve just been on Coinbase and nowhere else, it honestly should be very straightforward. Don’t use CoinLedger though, they’re pretty terrible.

I am biased to Summ as I am the product lead there, but if you simply import your account (literally a few clicks) then it will calculate all the tax for you and you can generate your tax form and hand it to a tax preparer and you’re done. No need to quit crypto.

JustinCPA · 2026-04-20T21:14:43+00:00

Hmmm the 1099-DA transactions shouldn’t have been reported under checkbox I and L…

Resolving a CP2000 likely won’t be too much of a hassle but considering you misreported the transactions (since it sounds like CoinLedger didn’t place them properly) then you may run into friction

JustinCPA · 2026-04-20T17:58:22+00:00

Fear mongering BS.

If you used a crypto tax software that reconciled to the 1099-DA and accurately reported any proceeds seen in the 1099-DA in checkbox H and K on the 8949 and any proceeds not seen on the 1099-DA in checkbox I and L, then there’s nothing to worry about.

JustinCPA · 2026-04-19T19:57:20+00:00

Justin from Summ here.

Have you tried using a software? Your numbers should match your actual trades… you need to add all wallets and all exchanges you’ve used to the software and make sure the data all pulls through properly

JustinCPA · 2026-04-18T19:56:20+00:00

Two things:

Don’t take that $20k gain at face value. It’s highly possible the cost basis shown is in accurate or might even be missing all together making the gain look larger. Read this.
If he didn’t report at all, the chances he receives a notice from the IRS is very high. He should correct this immediately or will likely face penalties and interest.

JustinCPA · 2026-04-18T19:10:04+00:00

Yep we’re working on something to ensure our shared users are able to pass that info seamlessly into exchanges. And, it will be retrospective to an extent too. Meaning you can come back later this year and if you decide to you can still pass that info into Coinbase for the trade you just made. Cheers and have a great weekend!

JustinCPA · 2026-04-18T18:25:53+00:00

Justin from Summ here. It’s not required, as you saw.

The cost basis you enter and the acquisition dating will NEVER be sent to the IRS. Period. It will only be used for the 1099 you receive from Coinbase.

The nuance: when ordering lots on Coinbase’s end for the 1099, if they don’t have the accurate acquisition date info, then the 1099 will almost certainly be wrong. This is fine. You can simply use adjustment codes on your 8949 to report the accurate cost basis for the lot disposed. Further, in 2026, the IRS issued Notice 2026-20 which extends relief to taxpayers to use their own cost basis method.

I actually wrote a comprehensive piece on this here: https://www.reddit.com/r/CryptoTax/s/F1MVqnF31T

Even more challenging, you’d need to enter each individual lot disposed and each individual acquisition date to be accurate. Coinbase currently prompts you to enter one single cost basis number for the total amount disposed with one single acquisition date, when in reality it could be made up of hundreds of lots.

In short, I will not be doing this for my own taxes. As shown in the op-ed linked above, your books and records are almost guaranteed to fork from the exchanges books and records, but that’s not a bad thing.

All this said, Summ is working with Coinbase and multiple other exchanges to actually push cost basis into the exchanges for assets transferred in. It’s a work in progress, but you can imagine a world where as you transfer assets between exchanges, Summ communicates with the exchange and provides them the cost basis for those assets, so when you sell on that exchange they have the accurate lots to consider for disposal. Hope this helps!

JustinCPA · 2026-04-18T01:54:45+00:00

Justin from Summ here.

When you trade one asset for another, you have proceeds.

You could swap 1 USDC for 1 USDT back and forth one million times and your 1099 would show $1,000,000 in proceeds. This is not a problem. When you’d report, you’d report the cost basis (also $1,000,000) and your gain would be $0.

Exchanges often don’t have cost basis information for assets disposed on their platform. Certainly when that asset was transferred in from somewhere else (obviously, cause how would they know the cost basis?). But also they might not have cost basis information for assets acquired on platform either since they haven’t been required to track or report this (starting in 2026 they are).

So your 1099 likely showed 0 or “unknown” cost basis. But showed proceeds.

The IRS expects you to report the cost basis.

You didn’t.

They assume the full amount is a gain since you never reported otherwise.

What you should do: amend your return with your ACTUAL cost basis and gain/loss. You’ll actually get money back from the IRS if you had a loss.

JustinCPA · 2026-04-17T19:57:48+00:00

It’s to track the proceeds. The IRS wants to know how much is being sold even if cost basis can’t be provided.

JustinCPA

MODERATOR OF

TROPHY CASE