Unattached basis is cost basis that has been tracked for an asset as a whole rather than attached to particular units in a particular wallet or account. It arises where a holder pooled basis across all their wallets, so that the total basis of a token is known but no lot is tied to the wallet that actually holds the units.
A holder who bought 3 BTC over several years and spread them across an exchange account, a hardware wallet and a mobile wallet may have tracked them as one pool: three tax lots with three costs, and 3 BTC in total, but no record of which lot sits in which wallet. Every sale from any wallet was matched against the pool. The basis is real and documented; it is unattached because it is not assigned to units by location.
Once basis has to be tracked wallet by wallet and account by account, a pool is not usable. A sale from the hardware wallet needs the hardware wallet's lots, and the pool does not say what they are. Attaching the basis means deciding, for each wallet and account, which of the pooled lots it holds, so that the units in that wallet and the basis assigned to them match.
The attachment can be done unit by unit, assigning particular lots to particular wallets, or by a rule applied across all wallets in a stated order. Either way the result is a ledger per wallet whose units add up to what the wallet held and whose basis adds up to no more than the pooled total.
Regulations section 1.1012-1(j) requires, for digital asset units acquired or disposed of on or after January 1, 2025, that units be identified within the wallet or account that holds them, with FIFO within that wallet or account applying where no adequate identification is made. A universal pool cannot operate under that rule, because a sale from one wallet cannot be matched against lots the record does not place in that wallet.
Revenue Procedure 2024-28 provides the transition. Basis that had not previously been attached to units on a wallet-by-wallet or account-by-account basis is allocated to the units held in each wallet or account as of January 1, 2025, under a reasonable allocation method that the taxpayer records. The allocation converts the pool into opening lots for each wallet and account, and sales from that date onward run against those lots. The allocation is a record the taxpayer makes and keeps; it is not reported to brokers, and a broker's Form 1099-DA for units already in its custody on that date will not carry the basis the allocation assigned to them.
An allocation cannot assign more basis than the pool held or more units than a wallet held. Basis for units that had already been sold before 2025 is used and is not available to allocate.
A holder's 2025 return is prepared from software still running a universal pool. No allocation of the opening lots to wallets was ever recorded. Each 2025 sale is matched against the pool's cheapest or oldest lot regardless of wallet, so the lots reported on Form 8949 are not the lots the regulation places in the selling wallet, and there is no record of an allocation to fall back on when the figures are questioned.
Read our Universal vs Wallet-Based Cost Tracking
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