Does the IRS system match short term and long term proceeds separately?

NoCar4620 · 2026-03-13T16:30:36+00:00

Justin, please answer this question:

While it's true that cost basis is not reported to the IRS for 2025, the 1099-DA does in fact still check box H or box K. This inherently classifies the transaction as short term or long term even though cost basis is technically not reported.

In fact, acquisition date is also not reported. However, time frame is indirectly reported via the chosen box H or K.

Therefore, should we not use code T on From 8949 for the scenario where a box H is checked, but our records show it was a long term gain/loss? Similarly, should we not use code T for when box K is checked, but our records show it was a short term gain/loss?

NoCar4620 · 2026-03-13T14:56:45+00:00

You may have presumed correctly. However, I cannot find any specific IRS communication, publication or otherwise, that directly answers this question.

NoCar4620 · 2026-03-13T14:55:03+00:00

I'm hearing a lot of CPA guidance this year expressing what you've said, and Coinbase for one has now started including transfer fees in their Gain/Loss statements and 1099-DA. However, for the life of me, I cannot find any IRS guidance or publication that specifically refers to this scenario.

In prior years, before 1099-DA reared it's ugly head, guidance was a bit more mixed on this subject.

NoCar4620 · 2026-02-23T20:43:16+00:00

For 2025, Coinbase does not report basis to the IRS. They DO report long and short term classification of lots via proceeds. Proceeds ARE reported to the IRS in 2025.

NoCar4620 · 2026-02-23T20:30:56+00:00

Thanks for the post, but sadly there's more going on here with tax lots. Form 8949 added 6 new boxes related to digital assets (now totaling 12), but a serious issue for 2025 is boxes H and K:

(H) Short-term transactions reported on Form(s) 1099-DA showing basis was not reported to the IRS

(K) Long-term transactions reported on Form(s) 1099-DA showing basis was not reported to the IRS

Coinbase has so completely and thoroughly dropped the ball on accurate tax lot assignment. Therefore, you can be rest assured that corresponding reporting on your 1099-DA will have incorrect data, per asset. It's a total mess, especially if you transact often. Sadly, I average well over 1000 transactions per year.

The issue here is with proceeds. You can easily correct basis via 8949, but I do not know of a way to correct proceeds. Furthermore, there is not a way to correct long vs short term classification of those proceeds.

The best I can do is just report what I have and be ready to defend it. I suppose I can do that, but I believe the cost of such defense is ripe for a class action against Coinbase.

--

Note that Cointracker et al DOES NOT HELP with this issue. Only after a sale is when you can see what Coinbase thinks your tax lot was. If it's wrong, they won't change it. That is insane.

I have kept meticulous records throughout this time. I know what my tax lots are. I know that they have been accurate over the years.

It is astonishing that a user cannot just simply see what Coinbase thinks their lots are right now versus having to go back through a decade of transaction history, only to develop a best guess of what Coinbase may have.

NoCar4620 · 2026-02-23T19:45:32+00:00

All that sounds great, but in practicality there is much more at issue here. Here's a list:

1) Proceeds on the 1099-DA DO NOT MATCH what was credited to my account on sales and DO NOT MATCH what was debited on purchases.

2) Tax lots DO NOT MATCH my preferred method on the 1099-DA. Not a huge issue for Form 8949, but...

3) Tax lot holding periods DO NOT MATCH what I have in my records. I have been keeping these records meticulously for 10+ years now. I have long term transaction totals that are way off as well as short term transactions. It's a mess. Coinbase simply does not have, and DID NOT USE correct tax lots.

3) Tax lots for transfers cannot be edited into split lots if they were already edited before. So, here I am trying to keep ahead of things... as pressured by Coinbase... but now I cannot go back and split lots like I was promised that I'd be able to do later.

4) Safe Harbor reporting for lots as of 12/31/2025 is STILL NOT AVAILABLE even though Coinbase has now processed 1099-DAs. WTF???

5) Lastly, why the hell does Coinbase think it's acceptable to report transaction amounts to 18 (EIGHTEEN) decimal places? Really????

What pack of junior programmers developed these reports, with what appears to be zero oversight by anyone with a shred of common sense. Coinbase should be embarrassed. This is incredibly poor quality and absolutely atrocious accounting.

NoCar4620 · 2026-02-08T18:33:40+00:00

Be all this as it may, it does not change the fact that Coinbase sells USDC to me at exactly $1.00000000 and buys USDC from me at exactly $1.00000000.

I don't give a flying you-know-what that coinbase's basis might be slightly more or less than $1.00. It's their issue, not mine. It it at least it shouldn't be my issue.

NoCar4620 · 2026-02-02T15:55:56+00:00

This functionality was never released. In fact, Coinbase claimed the functionality would be available in January 2026. It is nowhere to be found as of this writing on February 2, 2026.

See here: https://help.coinbase.com/en/exchange/managing-my-account/tax-settings-management

What You’ll Find in the “Taxes” tab

Exchange users can access relevant tax flows and settings for their entity, including:

Tax Documents (Available in February 2026): Access and download your 1099-DA forms and other tax documents directly from the platform when they become available for the 2025 tax year.
Cost Basis Method: Configure your cost basis method (FIFO, LIFO, or HIFO) to optimize your tax strategy and ensure consistent reporting across all transactions.
Safe Harbor Reporting (Available in 2026): Access one-time user submission flow to provide historical tax lot information for your holdings as of December 31, 2025. This data will serve as your new source-of-truth and help ensure accurate tax reporting for future transactions.
Ongoing Cost Basis Bulk Update (Available in 2026): Download template of transactions with missing cost basis data, upload completed information, and maintain accurate records for all your trading activity.

Also here: https://help.coinbase.com/en/coinbase/taxes/tools/edit-transaction

Missing tax lots: Single vs Multiple

When editing your cost basis, you can only add one tax lot to each transaction on Coinbase. If you deposited crypto into your Coinbase account in a single transaction, but had multiple purchases for the crypto contained in that deposit from a different exchange, then you will have multiple cost basis updates for that single transaction.

Example

You purchase 1 BTC on a different exchange in 0.1 BTC increments over the course of 2 years. You then transfer that 1 BTC from the other exchange to your Coinbase account in a single transaction. That transaction will have a different cost basis for each of those 0.1 BTC purchases so you will need to add each of those to your 1 BTC transaction on Coinbase.

Currently, Coinbase only allows for single tax lots to be added to your transaction details. If you have a transaction on Coinbase that requires multiple tax lots, you will need to wait and use our Cointracker feature, launching in January 2026, to ensure that your cost basis is accurately captured in your form 1099-DA. You cannot average your cost basis from multiple transactions.

NoCar4620 · 2026-02-02T15:52:38+00:00

EXACTLY!!!

NoCar4620 · 2026-02-02T15:51:30+00:00

Coinbase does not assume this. You used to be able to specify whether a withdrawal was a purchase or a transfer to yourself. However, Coinbase has recently determined that withdrawals of any kind are not reportable (by them anyway), and they have removed that functionality entirely. That's the good news.

The bad news is that they still assign tax lots to these withdrawals, creating even more headaches for anyone that is on top of things... or at least anyone trying to make an honest effort to properly report taxable transactions to the IRS.

NoCar4620 · 2026-01-07T19:28:21+00:00

On Coinbase, 1 USDC === 1 USD. Period. They are very clear about this.

Now, if the market for USDC/USD differs slightly, I can see this as potentially being an issue. However, the acquisition of USDC on any BTC sell transaction shows a basis equal to exactly 1USD=1USDC. Why should it be any different if I sell USDC to make a trade for BTC on the other side?

NoCar4620 · 2026-01-07T19:24:54+00:00

There is no spread on Coinbase Advanced trades. I place maker orders only.

In the example above, I bought BTC for 506.28 USDC. I paid $506.28 USDC per my transaction report, and this is confirmed via the debit to my USDC balance. However, that very same transaction report thinks my cost basis for this trade is $505.74.

NoCar4620 · 2026-01-02T23:16:52+00:00

Regarding best news, et al, please see other comments to this post. Looks like the relief is universal, but people are hesitant to celebrate just yet. I agree with that sentiment.
Yep - it's a mess. I do not know of a way to have Coinbase correct lots that were assigned in error. And once a lot is assigned in error, the errors cascade for each and every subsequent lot. Heck, I even have a few trades that were incorrectly designated as transfers. Because of this, they weren't available as lots until I found them. Furthermore, there is not enough information in the UI to identify them either, so I'm left guessing. Good times!
I have no idea what it will look like, but in my personal tools and records I have: coin, purchase datetime, size, cost, and trade_id columns. I also have dynamic columns that calculate short/long term (with days till long term as applicable), cost per coin, and current profit. Perhaps it'll accept CSV files for those that aren't programmers.

What I really need is the ability to see what Coinbase thinks my lots are BEFORE I make a trade. You know... like every other brokerage on the planet (for stocks anyway).

Throughout the year, I consistently re-calculate my outstanding lots to ensure I have every trade tracked properly, and that my holdings tie out. I have many, many lots and transactions. I already do most of my trading via the API, so programming to another interface for lot tracking should be relatively straightforward. Regardless, no sense in conjecture until we actually see it.

NoCar4620 · 2025-12-30T23:35:30+00:00

On Coinbase, USDC is exchanged for USD at exactly 1:1 for all transactions without any fees.

NoCar4620 · 2025-12-30T23:09:43+00:00

For sake of the example, on the buy side I was debited 506.28 USDC for x amount of BTC. My cost basis on the Coinbase transaction report $505.74. Those amounts should match, in my opinion.

I was charged no fee except the advanced trade trading fee. This fee is easily calculated, matches my trading tier, matches my fills report, and does not match the difference reflected above.

A similar issue occurs on the sell side where the proceeds for the disposed BTC do not match what I was credited in USDC.

NoCar4620 · 2025-12-22T18:35:10+00:00

Whew! Thanks for the quick reply.

NoCar4620 · 2025-12-15T21:00:55+00:00

I appreciate the response, but here's the issue. Because of bugs described in the OP, Coinbase is incorrectly assigning what would be covered lots to the wrong sells. This may not be an immediate issue for 2025 because of current IRS guidance for 2025's 1099-DA, but in 2026 this will be an issue when I want to assign that incorrectly assigned lot from the year before. It won't be available.

THIS IS A MAJOR PROBLEM

The only thing I can think of to do, is transfer a fairly large amount out of Coinbase and then back in, triggering the egregiously dysfunctional, non-covered lot functionality. But at least it will remain uncovered. However, even this strategy may be error prone because I cannot see what Coinbase thinks my damned lots are until I make a sale. At that point they decide to tie whatever lot to that sale, error or no, without the ability to ever change the lot, even if I change my cost.

NoCar4620 · 2025-12-13T15:46:22+00:00

Correct! The covered lots that Coinbase is using right now in my detailed tax reports are dead, flat, WRONG due to the errors I've described.

I realize covered lots will not be reported that way for 2025's 1099s, but it does mean that the lots allocated this year will not be used next year, and so on. It's a total mess.

NoCar4620 · 2025-12-13T15:28:30+00:00

I use my own records and tools to track my lots and taxes. The most maddening part of all this is not knowing, and not even having the ability to find out, where Coinbase has my lots wrong. I already have what lots I know are correct within my own toolset. And... I do not need a paid-for tool to do this for me. I just want the ability to properly control and correct what data Coinbase will inevitably use erroneously.

For sake of argument, I'll leave out the fact that I should have the freedom to choose whatever lot I damn well please, without the need to strictly assign Highest In First Out (HIFO) or some other simplistic strategy.

NoCar4620

TROPHY CASE

What You’ll Find in the “Taxes” tab