The IRS is giving taxpayers and brokers extra time to adjust to new digital asset reporting rules. Relief for cost basis identification will now last through 2026. Notice 2026-20 expands on earlier guidance by letting taxpayers choose how to identify which digital asset units are sold, disposed of, or transferred when held with a broker.  

The main challenge is that Section 1.1012-1(j)(3)(ii) requires taxpayers to make an “adequate identification” of specific digital asset units during a transaction, usually by notifying their custodial broker. But the IRS says many brokers are still building the systems needed to handle these instructions, so there is a gap between the rules and what brokers can do right now.  

To help with this, the notice lets taxpayers, during the relief period, record these identifications in their own records or use standing instructions set up ahead of time, as long as there is enough detail to figure out the basis and holding period. Without this option, transactions would have to use the first-in, first-out method, which could lead to unexpected tax results.  

This relief does not change the main reporting requirements or remove the need to follow them in the future. Instead, it gives a transition period while regulators work to balance enforcement with practical steps, helping taxpayers and brokers get used to a more organized digital asset tax system.