The IRS released Notice 2026-20 on March 18, 2026, giving taxpayers who hold digital assets through a broker one more year to track which specific units they sell using their own records. The relief period now runs through December 31, 2026.
Here is what that means in plain terms. When you hold cryptocurrency or other digital assets at a custodial broker like Coinbase or Kraken and sell some of those holdings, tax rules normally require you to tell the broker exactly which units you are selling. That matters because different units were bought at different times and prices, and picking the right ones can lower your tax bill.
The problem is that many brokers still have not built the technology to accept those instructions from customers. According to Accounting Today, the IRS acknowledged that brokers “are not currently ready to accept specific identifications (other than standing orders) from customers.” Without this relief, any sales would automatically default to the FIFO method, which stands for first-in, first-out, meaning your oldest and often cheapest units get sold first, potentially creating a bigger taxable gain.
Under the extended relief, you can identify which units are being sold by recording the details in your own books and records, using identifiers like purchase date, time, or price. You can also set up standing orders in your records before making a sale.
One important detail for 2026 is that brokers will now be reporting cost basis on the new Form 1099-DA for covered securities. That means the numbers your broker sends to the IRS may not match your own records. The IRS says your records control for federal tax purposes during this relief window, but you should document differences carefully.
This relief only applies to digital assets held at a custodial broker. If you hold crypto in a self-custody wallet, these rules do not cover you. You also need to meet the requirements of Revenue Procedure 2024-28 if you are relying on its safe harbor for basis allocation.
Small businesses that accept or invest in cryptocurrency should use the remaining months of 2026 to set up proper lot-tracking systems. Brokers are expected to finish building the required technology this year, and when the relief expires on December 31, 2026, you will need to communicate your lot selections directly to your broker or default to FIFO.
