Crypto IRS Revenue Procedure 2024-28: New Changes for 2025

Cryptocurrency is evolving, and so are the tax rules that surround it. For 2025, the IRS has introduced new revenue procedures aimed at making US crypto tax reporting clearer and more structured. While it might sound complex at first, these changes are designed to address some of the gray areas that crypto investors and traders have faced in the past. In this guide, we’ll break down the essentials and explain how these changes might impact you.

What is The IRS Revenue Procedure?

The IRS Revenue Procedure is a formal set of guidelines issued by the Internal Revenue Service (IRS) to help taxpayers understand and comply with specific tax laws. These procedures clarify how the IRS interprets certain laws, offering practical steps for taxpayers to follow.

When it comes to cryptocurrencies, Revenue Procedures provide clarity on how to report crypto-related income, calculate gains or losses, and adhere to evolving tax rules. They serve as a bridge between the law and real-world scenarios, ensuring taxpayers and tax professionals are on the same page.

If you are not familiar yet on general crypto tax rules, check out our expert guide on Crypto Taxes in the USA.

What is the IRS Revenue Procedure 2024-28?

IRS Revenue Procedure 2024-28 introduces a safe harbor method for taxpayers to allocate the unused basis of digital assets held in their wallets or accounts as of January 1, 2025. This procedure allows taxpayers to transition to the new IRS per-account method of accounting from using the universal method in the prior tax years.

IRS Revenue Procedure 2024-28 – Allocation methods

The revenue procedure includes two allocation methods to allocate remaining units of cost basis to the actual inventory of digital assets in each account or wallet: Specific Unit Allocation and the Global Allocation. Each method has unique benefits and requirements tailored to different types of taxpayers.

1. Specific Unit Allocation

The Specific Unit Allocation allows taxpayers to use discretion to identify and allocate units of cost basis to their actual inventory. This must be completed by January 1, 2025, or the first transaction in the year 2025.

Taxpayers must do the following:

• Reconcile their crypto transactions through December 31, 2024, and create a list of unused cost basis. CoinTracking currently supports this report and calls it the Closing Position Report.
• Take an inventory snapshot of their crypto balances by each wallet and account as of January 1, 2025. This will likely be on December 31, 2024.
• Allocate their units of unused cost basis to their holdings in each wallet and account before January 1, 2025, or the first transaction in 2025.

The inventory snapshot will show the token balances by wallet and account. It is recommended that you take screenshots of your account and wallet balances and include a timestamp.

Remember to include tokens held in liquidity pools, staking pools, and other third-party platforms where cryptocurrencies are stored. 

Many taxpayers may be unable to use the Specific Unit Allocation and will need to follow the rules for the Global Allocation Method.

To avoid errors and maximize potential tax benefits, it’s recommended to consult with a tax expert familiar with crypto taxation who can guide you through the process.

2. Global Allocation Method

The Global Allocation Method is a set of rules that taxpayers follow to allocate the remaining units of cost basis to their actual inventory and holdings. Discretion of allocating units of cost basis is not allowed.

For example, the assets with the highest cost basis will be allocated to hosted wallets (Centralized Exchanges) first, then to unhosted wallets (Self Custody Wallets).

Taxpayers must do the two following steps before the end of 2024 to meet the requirements of the global allocation and the safe harbor:

• Agree to a reasonable global allocation method before January 1, 2025 and save this to their books and records.
• Take a snapshot of their inventory by each account or wallet as of January 1, 2025. We recommend doing the snapshot on December 31, 2024.

The inventory snapshot will show the token balances by each wallet and account. It is recommended that screenshots of your account and wallet balances be taken and a timestamp included. Once this snapshot is taken, do not make any transactions until 2025.

Remember to include tokens held in liquidity pools, staking pools, and other third-party platforms where cryptocurrencies are stored.

The actual allocation must be completed by the due date of the 2025 tax return, including extensions, in the year 2026. This gives taxpayers time to reconcile their 2024 transactions and complete the allocation.

What does the Per-Wallet tracking method mean?

Previously, the Universal Tracking Method allowed taxpayers to aggregate all transactions across multiple wallets and exchanges, treating their crypto portfolio as a whole. While this approach was simpler, it often led to discrepancies and inaccuracies, particularly for taxpayers with complex trading histories or multiple accounts.

The Per-Wallet Tracking Method requires taxpayers to calculate gains, losses, and cost basis separately for each cryptocurrency wallet or account they use. Instead of aggregating all transactions across wallets or exchanges, this method ensures that every wallet is treated as its own entity for tax purposes.

You’ll need to maintain detailed records for each wallet or exchange account.

Every sale, trade, or transaction will need to be tracked on a wallet-by-wallet basis.

What Does the Revenue Procedure mean for Businesses & Crypto Investors?

The new Revenue Procedure impacts both individual crypto investors and businesses using or transacting with digital assets.

What Crypto Investors Need to Do Now

For investors, the new rules mean it’s time to get organized. Here’s what you need to do:

• Consolidate Records: Gather detailed transaction histories for each wallet or exchange you’ve used.
• Transition to Per-Wallet Tracking: Investors must adapt to tracking the cost basis and transactions of digital assets on a per-wallet basis starting on January 1, 2025.
• Allocation of Unused Basis: The procedure provides a safe harbor for allocating unused basis of digital assets held as of January 1, 2025, allowing for reasonable allocation methods to be applied within each wallet or account.
• Choose an Allocation Method: Decide between the Specific Unit or Global Allocation approach.
• Snapshot as of January 1, 2024: Taxpayers must take a snapshot of their holdings as of January 1, 2024 in order to do the allocation under the Specific Unit or Global Allocation methods. For many, this can be done on December 31, 2024.
• Use Tax Software: Utilize platforms like CoinTracking to automate cost basis calculations and prepare for compliance.

What Business Owners Need to Do Now

Businesses dealing with crypto, whether accepting it as payment or holding it as an asset, face similar challenges but on a larger scale. Key actions include:

• Set Up Proper Accounting Systems: Implement systems that separate and track crypto transactions for each account or wallet.
• Understand New Reporting Obligations: Ensure compliance with Form 1099-DA and other IRS requirements.
• Consult Professionals: Work with tax advisors or accountants to align your practices with IRS guidelines.

Conclusion on the IRS Rev. Proc. 2024-28

Staying compliant with the IRS’s new Revenue Procedures for crypto is easier with the right tools. CoinTracking software simplifies per-wallet tracking, cost basis calculations, and reporting, ensuring you’re always ready for tax season. When in doubt about applying the new rules or choosing the right allocation method, it’s always wise to consult with a tax expert familiar with cryptocurrency taxation. Their guidance can help you avoid costly mistakes and ensure full compliance with IRS requirements.