Cost basis: how a US company tracks what its bitcoin cost

How it works

The IRS treats digital assets as property, and Notice 2014-21 says the basis of virtual currency received is generally its fair market value in dollars at the time, or the amount paid. Transaction costs to acquire it are generally added. When the company sells, swaps or spends bitcoin, the gain or loss is the dollar amount realised minus the basis of the units disposed of.

Since 1 January 2025, basis is tracked wallet by wallet or account by account. Revenue Procedure 2024-28 gave a safe harbour for allocating unused basis to wallets as of that date. Under the Treasury regulations, a company can specifically identify which units it is disposing of if it records the identification on its books no later than the time of the disposal and keeps adequate records. If it does not, units in a wallet not held by a broker are treated as disposed of in order of acquisition, first in, first out.

Why it matters for a company

For a US corporation, capital gains are taxed at the corporate rate, 21% federally, and capital losses can only offset capital gains, carried back three years and forward five. The choice of units can therefore change the timing of tax. That choice must be made at the time, in the records, not afterwards when the tax return is prepared.

Basis records also need to survive the life of the holding. IRS guidance on record keeping says records that verify basis should be kept for as long as they are needed. A purchase in the first year can determine the gain on a sale many years later.

A UK company does not track basis by unit. Its bitcoin is usually one pooled asset with a single pooled cost, with same day and ten day matching rules. See section 104 pool.

Common mistakes

• Choosing lots after the year end.
• Moving coins between wallets without moving the basis record with them.
• Forgetting that paying a fee in bitcoin is itself a disposal.

Related

• Section 104 pool
• Form 1099-DA
• UTXO
• Fair value
• Company tax on bitcoin
• All glossary terms

Sources

Primary sources only. Each link was checked on 9 November 2026. Rules change, so confirm the current version with your adviser.

1. IRSNotice 2014-21: virtual currency is treated as property for federal tax purposes
2. IRSRevenue Procedure 2024-28: allocating unused basis to wallets and accounts (PDF)
3. Cornell LII (unofficial copy of the CFR)26 CFR 1.1012-1(j): digital assets, specific identification and the first in, first out default
4. IRSPublication 542, Corporations: 21% rate and capital losses
5. IRSDigital assets
6. HMRCCRYPTO41350: Corporation Tax on chargeable gains, pooling and the same day and ten day rules