Account-by-account cost basis is the tracking of tax lots separately for each custodial account, such as an account at an exchange or broker. A sale from an account is matched against the lots held in that account, and units transferred in or out carry their lots between the account and wherever they came from or went.
An exchange or broker account is a container of tax lots in the same way an unhosted wallet is; see wallet-by-wallet cost basis. The difference is who keeps the ledger. For units bought in the account, the broker holds the acquisition date and price and can match a sale against its own lot records. For units transferred into the account from a wallet or another platform, the broker sees the arrival but not the original purchase, so its ledger for those units has a date of arrival and no cost.
The holder's own records therefore have to run alongside the broker's. A holder with accounts at two exchanges keeps a lot ledger for each, and a sale at one exchange cannot draw on lots held at the other, however much cheaper they are.
Under Regulations section 1.1012-1(j), for digital asset units acquired or disposed of on or after January 1, 2025, units held with a broker are identified within the account that holds them. A sale is matched against the lots in that account, by FIFO unless the taxpayer makes an adequate identification. For broker-custodied units the identification is made to the broker no later than the sale, or through a standing order the broker applies. The broker applies the same rules when preparing Form 1099-DA, so an instruction the broker never received does not appear on the form.
For 2025, IRS Notice 2025-7 provided relief that let taxpayers rely on their own records to identify units held with a broker where the broker did not support per-sale identification or standing orders. That relief is for 2025.
The transition into account-level tracking is governed by Revenue Procedure 2024-28. Basis that had been tracked across all holdings rather than attached to the units in each account, called unattached basis, is allocated to the units held in each account as of January 1, 2025 under a reasonable allocation method that the taxpayer records. Units transferred into an account after that date arrive with the lots recorded in the holder's ledger for the sending wallet, and the broker's report for those units will carry the basis only if it was given the acquisition information; see transferred-in digital assets.
A holder keeps BTC at two exchanges and runs HIFO across both in their tax software. A 2025 sale at the first exchange is reported against a high-cost lot that was bought at, and still sits in, the second. The first exchange applied FIFO to its own lots and reported accordingly. The return and the broker's form disagree, and the lot the return consumed is still held elsewhere with its basis now claimed twice.
Read our Universal vs Wallet-Based Cost Tracking
CountDeFi provides done-for-you crypto tax accounting, including per-account lot ledgers, broker standing orders and reconciliation of account records against Form 1099-DA. See pricing.
