Last Updated on April 5, 2025 by Patrick Camuso, CPA
Revenue Procedure 2024-28 addressed a one-time transition in digital-asset basis accounting that took effect January 1, 2025.
Beginning in 2025, the federal basis rules moved away from treating identical digital assets across multiple wallets or accounts as one universal pool. Basis identification now operates within the wallet or account in which the units are held.
Revenue Procedure 2024-28 provided a safe harbor for allocating unused basis to digital-asset units held as of January 1, 2025.
That transition date has passed. A taxpayer who did not satisfy the safe harbor does not automatically lose cost basis, automatically default every transaction to zero basis, or automatically owe penalties.
The taxpayer also cannot assume the protection of the safe harbor.
The current question is what basis records existed at the transition date, how the taxpayer actually accounted for post-2024 transactions, and whether the resulting wallet- or account-level inventory can be substantiated under the rules otherwise applicable.
What Revenue Procedure 2024-28 Actually Did
Revenue Procedure 2024-28 provided a transition safe harbor for taxpayers that held unused digital-asset basis as the federal rules moved to wallet- and account-level basis accounting beginning January 1, 2025.
The procedure allowed qualifying taxpayers to allocate that unused basis among digital-asset units held in the taxpayer’s wallets or accounts as of the transition date.
It did not create a recurring annual filing deadline.
It also did not determine the tax treatment of every taxpayer who failed to satisfy the safe harbor.
A taxpayer outside the safe harbor must analyze basis under the otherwise applicable rules and the taxpayer’s actual historical records.
The transition also should not be confused with HIFO or LIFO as labels. After the transition, lot ordering occurs within the applicable wallet or account. A highest-basis, latest-acquired, or other lot-ordering strategy can operate only through an adequate specific identification where the rules permit it.
Revenue Procedure 2024-28 and Notice 2026-20 Address Different Problems
Revenue Procedure 2024-28 addressed the allocation of unused basis into the wallet- and account-level framework as of January 1, 2025.
Notice 2025-7 and Notice 2026-20 address a different issue: how eligible taxpayers can adequately identify particular units held in the custody of a broker when units are sold, disposed of, or transferred during the temporary relief period.
Notice 2026-20 extends that temporary identification relief through December 31, 2026.
During that period, an eligible taxpayer can make certain adequate identifications in the taxpayer’s own books and records without communicating the identification to the broker.
That relief does not reopen the Revenue Procedure 2024-28 transition safe harbor and does not change the broker’s Form 1099-DA reporting obligations.
The two rules therefore have to be analyzed separately.
What to Do If the 2025 Transition Was Not Properly Documented
Start with the taxpayer’s digital-asset inventory immediately before and after January 1, 2025.
Identify the wallets and accounts in which each type of digital asset was held.
Determine the unused basis associated with the units held at the transition date and identify how that basis was carried into the post-2024 records.
Review the taxpayer’s actual 2025 and 2026 dispositions to determine which wallet or account supplied the units sold and what lot-identification method was used.
Reconcile the resulting inventory to current holdings and Forms 1099-DA.
If the records support a consistent wallet- or account-level basis history, document that history.
If they do not, reconstruct the accounting only as far back as necessary to establish the relevant basis allocations and subsequent dispositions.
Whether prior returns require amendment is a separate question that should be determined from the tax effect of the accounting corrections and the taxpayer’s filing history.
When Historical Reconstruction Is Necessary
A missing Revenue Procedure 2024-28 safe-harbor record does not automatically mean that a taxpayer must reconstruct every transaction since entering the digital-asset market.
The required scope depends on the evidence that remains.
If the taxpayer can establish the units and unused basis held in each wallet or account at the transition date and trace subsequent dispositions forward, a narrower reconstruction may be sufficient.
If the opening inventory itself cannot be established because acquisitions, transfers, or prior dispositions are missing, the accounting may need to go further back.
The objective is to establish a defensible wallet- and account-level basis record, not to recreate history that has no effect on the taxpayer’s current or prior reporting.
Why the 2025 Transition Still Matters
The transition is no longer prospective, but its accounting consequences continue.
Every post-2024 disposition depends on the units and basis carried into the relevant wallet or account.
Form 1099-DA now creates an additional broker-reported record against which that accounting can be reconciled.
For 2026 sales, brokers must report basis for covered digital assets. Older and transferred-in positions can remain noncovered and may have no broker-reported basis.
A taxpayer whose historical wallet-level inventory is unreliable can therefore encounter basis differences that cannot be solved from the broker form alone.
What Missing the Safe Harbor Does Not Automatically Mean
Failing to satisfy Revenue Procedure 2024-28 does not automatically mean the taxpayer has zero basis.
It does not automatically mean every post-2024 disposition must use FIFO without regard to the taxpayer’s actual records and applicable identification rules.
It does not automatically mean additional tax, penalties, or interest are due.
It does mean the taxpayer cannot rely on the safe harbor itself.
The resulting treatment has to be established from the taxpayer’s records, the rules otherwise applicable to the units, the taxpayer’s post-transition accounting, and any corrective reporting that may be required.
The Current Objective Is a Defensible Continuing Basis Record
Revenue Procedure 2024-28 was a transition rule. The transition date has passed, but the basis record created at that point continues to affect every later disposition.
A taxpayer who did not properly document the transition should determine what can still be established from the existing records before assuming that the entire portfolio must be rebuilt or that the most adverse tax result automatically applies.
The accounting should ultimately establish the basis and holding period of the units remaining in each wallet or account, reconcile the units already disposed of, and connect those records to current broker reporting.
Camuso CPA helps digital asset investors reconstruct historical basis, evaluate Revenue Procedure 2024-28 transition issues, reconcile Forms 1099-DA, and establish continuing wallet- and account-level accounting where the existing records are incomplete.
Related service: Crypto CPA.
This article is provided by Camuso CPA for general informational purposes and does not constitute legal, tax, accounting, or investment advice. Tax laws and regulations are evolving rapidly and the information presented may not reflect current guidance. Reading this article does not create a CPA-client relationship. For advice on your specific situation, schedule a consultation with Camuso CPA.
Camuso CPA, PLLC
