Notice 2026-20 Crypto: The December 31 Lot ID Deadline

On October 1, 2026, 24/7 Wall St reported to a mainstream audience what the IRS had set out quietly in March: the Notice 2026-20 crypto relief, which lets your own records decide which units you sold at a broker, ends on December 31, 2026. It ends just as brokers prepare the first Form 1099-DA statements that carry cost basis for 2026 sales. Any lot choice that exists only in your spreadsheet will run into a FIFO-based form in early 2027.

I'm Chris Herbst, Managing Director at CountDeFi, a global crypto tax reporting firm specializing in complex cryptocurrency and DeFi reconciliations. I am a Chartered Business Accountant in Practice, CBAP (CIBA), with the Chartered Institute for Business Accountants, and a General Tax Practitioner, GTP (SAIT), with the South African Institute of Taxation. Since 2017, our team has rebuilt lot-level cost basis for clients across exchanges and self-custody wallets, including the wallet-by-wallet transition that took effect in January 2025.

This guide is for US investors who sell crypto held at Coinbase, Kraken, Robinhood or another custodial broker and want their 2026 lot choices to hold up on the return and keep working after the relief ends.

What Is Notice 2026-20 for Crypto Investors?

Notice 2026-20 is an IRS notice released on March 18, 2026. It extends through December 31, 2026 the temporary relief that lets you identify which broker-held crypto units you sold in your own books and records, instead of telling the broker. The release date comes from EY's summary. The notice itself was printed in Internal Revenue Bulletin 2026-15, dated April 6, 2026, at page 800. Some coverage, including the 24/7 Wall St piece, gives April 6 as the publication date, but that is the bulletin date. The notice states that "Notice 2025-7 is modified," extending the relief first granted for 2025 in Notice 2025-7 (2025-5 I.R.B. 524).

What does the permanent rule require?

Treasury Regulation Section 1.1012-1(j) decides which digital asset units count as sold, and it applies account by account (wallet by wallet). For units held by a custodial broker, Section 1.1012-1(j)(3)(ii) says adequate identification means telling the broker which units you are selling no later than the date and time of the sale, disposition or transfer. A standing order given to the broker also counts. If the broker offers only one way to identify units, that method is treated as your standing order. If you identify nothing, Section 1.1012-1(j)(3)(i) applies first-in, first-out (FIFO) within that account. Our guide to FIFO, specific ID and ACB walks through the arithmetic.

What does the relief allow?

For units held in a broker's custody, section 4.02 of the notice lets you make an adequate identification on your own books and records in one of two ways:

1. Per sale. Identify the specific units in your records no later than the date and time of the sale, disposition or transfer, using an identifier such as purchase date and time or purchase price.
2. Standing order. Record a standing order, such as highest cost first, that "includes sufficient information to identify" the units and is entered before the units it covers are sold, disposed of or transferred.

Section 4.01 limits the relief to units "held in the custody of a broker." Section 4.03 turns off the one-method rule for anyone identifying units under section 4.02, so during the relief period a broker's single option does not automatically become your standing order. Section 4.04 says that if you used the Rev. Proc. 2024-28 safe harbor to allocate basis across wallets, you can rely on the relief "only after the applicable requirements of Rev. Proc. 2024-28 have been satisfied."

What is actually new in Notice 2026-20?

Section 4.05 is the genuinely new provision. It says that if you identify units in your own records, "for Federal income tax purposes the units sold, disposed of or transferred by the taxpayer are the ones identified," even when the broker reports something else, as Current Federal Tax Developments sets out. If you specified units to the broker instead, the broker-specified units control. Some commentary calls the before-the-sale timing rule for standing orders new. It isn't: section 4.02 of Notice 2025-7 already required the order to be "entered into the taxpayer's books and records before the units covered by the order are sold." The notice leaves broker reporting under Section 1.6045-1 untouched and warns that, for 2026 transactions, "the acquisition date and basis reported by a broker to a taxpayer" may not match your records. The stated reason for the extension is that brokers cannot yet accept specific identifications other than standing orders and are "expected to complete building and implementing the systems necessary to do so during 2026."

When Does the Notice 2026-20 Crypto Relief End?

The Notice 2026-20 crypto relief ends on December 31, 2026. The notice defines the relief period as "the period beginning on January 1, 2025, and ending on December 31, 2026," and taxpayers "may not rely on the temporary relief described in section 4.02" for later sales.

What changes on January 1, 2027?

From January 1, 2027, your identification of broker-held units has to reach the broker by the time of the sale, either for each sale or as a standing order given to the broker. A standing order that exists only in your own spreadsheet stops counting. The one-method rule in Section 1.1012-1(j)(3)(ii) applies again, so if your broker offers a single method, that method is your standing order. If you have nothing on file with the broker, FIFO applies, and the broker's FIFO-based Form 1099-DA becomes the default answer.

Will the IRS extend the relief into 2027?

The IRS has published no statement extending the relief past December 31, 2026. One view holds that the relief ends as written, since the notice bars reliance after the period and expects brokers to finish their systems in 2026. The other view leaves room for another extension, and EY asks whether "customers and the IRS will allow brokers more time beyond the end of 2026." Camuso CPA advises against assuming an extension, and we plan our clients' year-ends the same way.

What Happens to Your Form 1099-DA Basis If You Do Nothing?

If you do nothing, your broker reports your earliest-purchased units as the ones sold. For covered units, it sends that FIFO basis to the IRS in Box 1g of Form 1099-DA, even when your own records identify different units. The Form 1099-DA instructions say a broker "generally must first report the sale of the earliest units of the digital asset purchased by the customer" unless the customer adequately identifies other units. A standing order kept only in your own records governs your tax under Notice 2026-20, but it does not change the broker's form.

Which units does the 1099-DA report basis for?

Box 1g basis is required only for covered securities. The instructions define these as digital assets "acquired after 2025 for cash," in "an account for which the broker provided custodial services," and held "in that account until the broker effects the disposition." Units bought before 2026, or transferred in from elsewhere, are noncovered, and the broker may check Box 9. A blank Box 1g means the broker did not report basis; it does not mean your basis is zero. Our box-by-box guide to Form 1099-DA and our guide to fixing missing cost basis cover these gaps.

How much can the lot choice matter?

The 24/7 Wall St article uses a composite example: a 0.2 BTC sale for $16,740.75. Under FIFO, the 2016 lot has a basis of $122.19, which produces a $16,618.56 long-term gain and $2,492.78 of tax. Specifically identifying a 2025 lot instead gives a basis of $22,813.54 and a $6,072.79 short-term loss. Of that loss, $3,000 is deducted, saving $660, and $3,072.79 carries forward. The article puts the difference at "about $3,153."

How do you report a mismatch on Form 8949?

You report your own lots on Form 8949 and reconcile them with adjustment code B, which applies when "box 1g on Form 1099-DA is incorrect." Short-term digital asset sales go in box G, H or I, and long-term sales in box J, K or L. The instructions say digital asset transactions "should not be reported using box C or F." Where the broker reported basis to the IRS (box G or J), you enter the reported basis in column (e) "even though that basis is incorrect" and correct it with an adjustment in column (g). Where basis was not reported (box H or K), you enter the correct basis in column (e) and -0- in column (g). These are the 2025 instructions, last updated April 30, 2026. See our Form 8949 template for crypto and our guide to reconciling Form 1099-DA with crypto tax software.

Will a code B adjustment trigger an IRS notice?

No published IRS guidance says whether the IRS matching program will treat a code B adjustment backed by a section 4.05 identification differently from any other mismatch. Current Federal Tax Developments and EY point taxpayers toward reporting their own lots, reconciling with code B and keeping lot-level records. For covered lots, that means the mismatch shows on each line. Koinly and CCN describe the result as "two versions of the same trade," and Koinly warns that switching back to the exchange's version later creates inconsistencies. You can be right on the law and still get a matching notice, so keep the records that show why your numbers differ. If a letter arrives, our page on IRS representation for crypto explains who can answer it for you.

How Does Notice 2026-20 Compare With Telling Your Broker?

Through December 31, 2026, Notice 2026-20 lets an identification or standing order kept in your own records count for broker-held units. An identification given directly to the broker counts both in 2026 and from January 1, 2027.

Most rows have a clear answer. Two questions don't, and both matter for anyone who set a method in 2025 and forgot about it.

What if your spreadsheet and your broker setting disagree?

Notice 2026-20 does not say which identification wins when your recorded standing order says HIFO but your broker setting stayed on FIFO, or you chose LIFO there. Section 4.05 says identification in your books controls, but also that "if the taxpayer instead specifies to the broker, the units specified to the broker control." One reading is that the first valid identification controls. Another is that anything communicated to the broker displaces your books. No published guidance resolves the conflict, so the practical fix is to make the two match before more sales happen.

Is HIFO a valid standing order?

The notice does not mention HIFO by name. Some practitioners, including Camuso CPA, say HIFO and LIFO are not IRS methods but strategies applied through specific identification, so only an order that pins down specific lots works. Others read a generic "highest cost first" rule as meeting section 4.02's "sufficient information" test. Coinbase Prime and Kraken both offer HIFO as a broker standing instruction. We write standing orders that state the account and the ranking rule and record the lots it selected, which works under either reading.

What Should You Set Up With Each Broker Before December 31, 2026?

Before December 31, 2026, you should have a dated standing order in your own records for each broker account, covering any remaining 2026 sales. You should also set the same lot method directly with each broker, so a valid identification is already in place when the relief ends. Here is the checklist we work through with clients:

1. Record a standing order for each account before the sales it covers. Name the account and the method, and include enough detail to identify the units. The notice sets no format, timestamp or retention rule. Camuso argues the notice changes where the record lives without lowering the standard, while Mercer St and 24/7 Wall St present a dated note as enough. Because nothing in the notice says what proves the date, keep a copy with an independent timestamp, such as a dated email to yourself.
2. Set the same method in each broker's settings for 2027. This removes the conflict question and gives you a valid identification once the relief lapses.
3. Confirm the Rev. Proc. 2024-28 step. The one-time allocation "generally must be completed by Jan. 1, 2025" and "is irrevocable," and section 4.04 makes it a precondition if you used it.
4. Supply acquisition data for transferred-in units. Brokers may use it to choose lots, though not to report basis.
5. Check how trading fees are identified. Fee units can consume lots your order meant to keep.
6. Compare your remaining lots with the broker's as of December 31. Write down any differences now, while the trades are recent.

Coinbase

Coinbase's Prime help page states that Coinbase "is only able to accommodate standing orders or instructions for FIFO, highest-in-first-out ('HIFO'), and last-in-first-out ('LIFO') methods," with FIFO as the default. Its Coinbase Exchange tax-settings page says lots are disposed of by the chosen method starting January 1, 2026, defaulting to FIFO, and told users to set a method by December 31, 2025. That page covers Coinbase Exchange and does not say whether retail Coinbase accounts work the same way. Our guide to Coinbase tax documents explains the forms you will receive.

Kraken

Kraken's Tax Center page lists FIFO (the default), LIFO, HIFO and LOFO. It says changes apply to transactions on or after January 1, 2026, take effect only going forward and don't affect prior tax years. The page does not mention standing orders, trade-by-trade specific identification or IRS notices. Kraken's guide to its 2025 combined Form 1099 says it used FIFO because it "did not solicit or receive a lot relief method election" for 2025, and that 2025 FIFO basis and gain or loss figures were not reported to the IRS.

Robinhood

Robinhood's crypto tax lots page lets you pick lots on each sell order. It says lot selection is "only available for coin-based orders, not dollar-based orders, and isn't available for stablecoins," and "will only apply to sell orders," not withdrawals. Units you don't select follow FIFO, but lots with unknown or zero basis are closed first. Transferred-in lots show basis as N/A until you add it.

Self-custody wallets

Units in a Ledger, MetaMask or Phantom wallet are outside Notice 2026-20, because section 4.01 covers only units in a broker's custody. You identify those units in your own records under the permanent rule, and that does not change in 2027. Our Phantom wallet tax guide covers self-custody reporting.

Where Does the Notice 2026-20 Crypto Reporting Actually Break Down?

The reporting breaks down because the broker's Form 1099-DA follows the broker's own lot record while Notice 2026-20 lets your books govern your tax. You end up keeping two ledgers that have to be reconciled line by line on Form 8949. Four data problems cause most of the work.

Transfer-in dates replace real acquisition dates

Brokers "treat digital assets transferred into the customer's account as acquired as of the date and time of the transfer," use Box 12a and enter the transfer-in date in Box 12b. They leave Box 12b blank when units arrived on several dates. Your true holding period has to be rebuilt from on-chain history or the sending platform's records.

Your acquisition data only does half the job

Under the IRS broker FAQs (Q3 and Q7), a broker "is permitted, but not required, to take into account customer-provided acquisition information" for lot ordering but "may not rely on this customer-provided acquisition information" to report basis. Under Q4, the broker checks Box 8 when it does this. The result can be a 1099-DA that shows the right lot sold but a blank basis.

Fee units quietly consume lots

Under FAQ Q11, if you have not specifically identified the units used to pay fees, the broker "should apply FIFO" to them. Under Q12, swaps where the fee is withheld from the asset you receive are deemed identified. Either way, fees can use up lots your standing order meant to keep, and the fee lines rarely appear in a simple trade export.

Two lot pools on January 1, 2027

If your books sold the high-cost 2026 lot but the broker's system sold the old FIFO lot, your remaining lots and the broker's will differ when the relief ends. After that, the broker will compute basis on new sales from lots you treat as already gone. Camuso says this "has received limited attention in public commentary," and no IRS guidance addresses getting the two back in sync. The options practitioners discuss are a permanent difference reconciled with code B each year, supplying acquisition data for lot ordering, or moving units so the records line up. No published guidance says whether moving units is advisable.

What Are the Most Common Notice 2026-20 Crypto Mistakes?

The most common Notice 2026-20 crypto mistakes are timing and scope errors: writing the standing order after the sale, or assuming one order covers every account.

Writing the standing order after the sale

A standing order counts only for sales after it was entered. Deciding in March 2027 that you "always used HIFO" for 2026 does not meet the notice's before-the-sale requirement.

Assuming one order covers every account

Basis is tracked by account or wallet, so a standing order for Coinbase does not reach units at Kraken or in self-custody. Name each account.

Reading a blank Box 1g as zero basis

Box 1g is blank for noncovered units because the broker isn't required to report their basis, not because the basis is zero. Entering zero overstates your gain.

Applying a method to some sales and not others

No regulation or notice requires specific identification to be applied consistently. Camuso warns, however, that an examiner could challenge a taxpayer who applied a method selectively. Treat that as an examination risk, not a codified rule.

Should You Harvest Crypto Losses Before the December 31 Deadline?

Selling high-cost lots before December 31, 2026 to harvest losses does not trigger the wash sale rule under current law, because Section 1091 covers only stock and securities. However, pending legislation would change that with a backdated effective date. H.R. 10357, the Digital Asset Tax Certainty Act from Rep. Jason Smith, was introduced on September 14, 2026, and the Ways and Means Committee ordered it reported by a vote of 38 to 5 on September 16, 2026. As introduced, Sec. 301 replaces "stock or securities" in Section 1091 with "specified assets," effective for "dispositions after the date of the introduction of this Act." If that text were enacted unchanged, a December 2026 sale and buyback using HIFO lots could be caught retroactively. The committee-approved version may differ, and the bill is not law. Our pages on the crypto wash sale rule and US crypto tax reform track the bill. Any harvesting plan is worth confirming with a specialist before you trade.

Does Notice 2026-20 Have an Equivalent Outside the US?

Notice 2026-20 is a US-only rule. The UK pools tokens, Germany applies a wallet-by-wallet usage order such as FIFO, and the Canadian and Australian tax authorities' crypto pages describe no comparable records-based election.

United Kingdom

HMRC's CRYPTO22200 (updated 28 November 2025) pools fungible tokens by type in a pool under section 104 of TCGA 1992. Disposals are matched first under the same-day rule in section 105, then the 30-day rule in section 106A, and only then against the pool. NFTs "are separately identifiable and so are not pooled." The manual page does not say taxpayers can choose specific tokens. See our guide to the HMRC section 104 pool.

Canada

The CRA's crypto valuation page says "each type is considered to be a separate asset," but the CRA crypto pages do not discuss averaging or lot choice. The averaging formula for identical properties is in section 47(1) of the Income Tax Act. Third-party guides say Canada requires average-cost pooling with no FIFO or specific-ID choice, though no CRA crypto page states it in those terms.

Australia

The ATO's crypto asset investments page works through a cost-base example: A$800 plus A$5 gives A$805 against A$900 proceeds, a A$95 gain. It does not say how to choose which units were sold. Third-party guides say specific identification or FIFO is available where units can be individually identified, but the ATO page does not state this itself.

Germany

According to CMS's summary, the BMF letter of 6 March 2025, which replaces the letter of 10 May 2022, keeps the wallet-by-wallet view of which units are used first, "z.B. FIFO-Methode" (for example, the FIFO method), with a separate election for each token designation within a wallet. Wallet timestamps may be used for the one-year holding period under Section 23(1) sentence 1 no. 2 EStG, and missing records can lead to estimates under Section 162 AO. Our page on choosing a crypto tax accountant in Germany covers who can file.

Do You Need Help With Notice 2026-20 Crypto Lot Identification?

The weeks before December 31, 2026 are the last chance to put identifications in place that both Notice 2026-20 and the permanent rule will accept. The work is mostly data work. You need a dated standing order for each account, a lot ledger of what you treat as sold, and a reconciliation of that ledger against the broker's FIFO record, ready for code B adjustments on Form 8949 next spring.

CountDeFi Is Your Year-End Lot Identification Solution

We are not just accountants at CountDeFi, we are data scientists who work exclusively on crypto. We have worked with more than 1,000 clients globally since 2017. We draft standing orders for each account, match broker settings to your books, rebuild transfer-in holding periods from chain data and prepare the Form 8949 reconciliation behind your 2026 return. Book a free call with one of our crypto tax specialists before the deadline passes.