How Cartera Simplifies Rev Proc 2024–28
How Cartera Simplifies Rev Proc 2024–28
Introduction
This IRS publication, Revenue Procedure 2024–28, offers guidance on how taxpayers can allocate the cost basis of their digital assets (like cryptocurrency) for tax purposes. Here’s a simplified breakdown:
The Challenge
The IRS taxes cryptocurrency as property, meaning you need to track your cost basis (purchase price) to calculate gains and losses. This can get tricky if you have assets spread across multiple wallets or exchanges.
The Solution
The revenue procedure provides a “safe harbor” method for taxpayers to allocate their cost basis as of January 1, 2025. This allows taxpayers to assign their unused cost basis to their digital assets in a reasonable and consistent manner.
Key Takeaways
- Ending Global Cost Basis Allocation: Digital assets must be tracked individually for each of your accounts. This applies to your holdings as of January 1, 2025.
- Specific Identification: You can either assign cost basis to specific units or use a global rule (like FIFO — first in, first out) to allocate across your holdings.
- Unhosted Wallets: The guidance covers assets held in “unhosted wallets” (not on exchanges), providing flexibility for those managing their own private keys.
- Record Keeping: Maintaining accurate records is essential to comply with these rules.
Important Notes
- Consult a Professional: This is a complex area, and seeking advice from a tax professional specializing in cryptocurrency is highly recommended.
- Future Changes: Tax laws for cryptocurrency are constantly evolving, so stay updated on the latest guidance.
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The information in this post is intended for general knowledge and informational purposes only. It is not a substitute for professional advice. Every individual’s situation is unique, so it’s essential to consult with your own legal, business, or tax advisor for personalized guidance. Cartera is not liable for any actions taken in reliance on this information.