Crypto Capital Gains, Losses, and Rev. Proc. 2024-28: What You Need to Know

Cryptocurrency is treated as property for tax purposes, not foreign currency. Its disposal triggers taxable events. While the principle is similar, there are some significant differences when comparing with selling stocks or personal belongings.

• Holding Period Depending on whether you held the crypto for one year or less, this affects your federal tax rate on the gain/loss.
• Tracking Crypto transactions often happen outside brokerage, where no forms such as 1099-B will be issued. That means more effort for tracking.
• Wash Sale Wash sale rules currently do not apply to cryptocurrency transactions on Feb 3, 2025.

IRS Revenue Procedure 2024-28

Below are some highlights from Rev. Proc. 2024-28. It implies that the 1099-B you received previously may not be relied upon in the upcoming tax years. The specific rules are complicated and it will require detailed planning to avoid surprises in the future.

• Per Wallet Basis Taxpayers can no longer mix their cost basis across wallets or accounts even if they are using first-in, first-out (FIFO) method to determine their cost basis. Instead, they must track crypto assets by each wallet or account.
• Safe Harbor You may still have time to complete the safe harbor requirements even after Jan 1, 2025 if you meet a few conditions, which allows you to allocate your cost basis among your wallets.
• Record-Keeping Requirements Taxpayers must maintain detailed transaction records.