The IRS updates its crypto tax rules every year, and each update changes how investors, traders, and businesses handle their digital asset reporting. These rules shape how you track your assets, calculate gains, record income, and prepare for new forms. If you deal with crypto in any way, you need a clear understanding of how these procedures work because they guide what the IRS expects from you every tax season.
This article walks you through every major IRS Revenue Procedure that affects crypto, starting from the early rules to the most recent changes for 2025. You will see how the rules evolved, why the IRS introduced them, and what they mean for your tax reporting. When you finish reading, you will have a complete year-by-year picture of how IRS crypto compliance works.
Overview:
- IRS Notice 2014-21 defined crypto as property and set core tax rules.
- Rev. Proc. 2024-23 streamlined accounting method changes and improved bookkeeping clarity.
- Rev. Proc. 2024-28 introduced per-wallet cost basis and upcoming 1099-DA reporting.
- Rev. Proc. 2025-31 created staking safe-harbor rules for trusts and custodians.
What Are IRS Revenue Procedures?
IRS Revenue Procedures are rulebooks that explain how you should follow specific tax laws in everyday situations. They give clear steps so taxpayers know exactly what the IRS expects when they report income, track assets, or calculate gains. Think of them as instruction manuals that guide you through the right way to follow tax rules.
For crypto users, these procedures help you figure out how to track your digital assets, report your transactions, and meet new requirements each year. They take broad tax laws and turn them into simple directions so you can avoid mistakes and keep your records clean.
Also Read: How IRS Taxes Cryptocurrencies in the USA?
Comparing IRS Revenue Procedure
Here’s a clean, simple comparison table that highlights how each major IRS rule or procedure changed the landscape of crypto taxation.
IRS Guidance | What It Covers | Why It Matters | Key Impact on Crypto Users |
Notice 2014-21 |
|
|
|
Rev. Proc. 2024-23 |
|
|
|
Rev. Proc. 2024-28 |
|
|
|
Rev. Proc. 2025-31 |
|
|
|
IRS Revenue Procedure of 2014-24: The Foundational Rules
Notice 2014-21 created the first clear tax rules for crypto in the United States. These rules shaped how the IRS looks at digital assets today.
How Does the IRS Treat Crypto?
The IRS treats crypto as property. It never treats digital assets as real currency. Every time you sell, trade, or spend crypto, you create a gain or a loss because the IRS sees it as a property transaction.
How Does the IRS Calculate Income and Value?
The IRS wants every crypto transaction reported in U.S. dollars. You must check the fair market value of the asset on the exact day you receive it or use it. This value becomes your cost basis or your taxable income.
Income From Work, Mining, or Payments
When you earn crypto through work, mining, staking rewards, or services, the IRS treats that value as income. You include the dollar value of the crypto on the day you receive it.
Reporting Requirements for Payments
Crypto payments follow the same reporting rules as payments made in property. Some payments need a Form 1099-MISC. Some businesses may need to issue 1099-K forms. If a contractor earns $600 or more in crypto, it usually triggers reporting requirements.
Penalties for Wrong Reporting
The IRS charges penalties when taxpayers report crypto the wrong way or hide crypto transactions. These penalties cover accuracy issues, late filings, and incorrect information returns.
IRS Revenue Procedure 2024-23: Accounting Method Changes
Revenue Procedure 2024-23 explains how taxpayers can switch certain accounting methods without going through a long approval process. This procedure does not focus on crypto directly, but it influences how businesses that deal with digital assets organize their books. Any business that holds, earns, or spends crypto needs clean records, and this procedure supports that by giving clear steps for method changes.
What This Procedure Covers?
Revenue Procedure 2024-23 gives taxpayers a simpler way to request changes in their accounting methods. It allows businesses to adjust their methods without formal IRS approval as long as they follow the rules in this procedure.
Why Should Crypto Users Still Know This?
Crypto businesses handle many moving parts, and clean accounting helps them stay compliant. This procedure guides them when they adjust the way they record income, expenses, or asset values.
- It supports businesses that need organized books for accurate crypto tax reporting.
- It allows smooth updates to accounting methods without long approval delays.
- It strengthens record-keeping so later crypto-specific IRS rules become easier to follow.
- It lowers the risk of mistakes when handling digital asset transactions.
IRS Revenue Procedure 2024-28: New Rules Beginning 2025
Revenue Procedure 2024-28 introduces the biggest shift in crypto tax reporting since the IRS first released guidance in 2014. Starting in 2025, taxpayers must track their digital assets on a wallet-by-wallet basis instead of treating their entire portfolio as one unit.
This procedure also creates a safe harbor for unused cost basis and supports the rollout of Form 1099-DA. These updates aim to reduce mistakes and create a cleaner system for tracking gains, losses, and basis.
Per-Wallet Tracking Rule
Every wallet and exchange account now stands on its own for tax purposes. You must track cost basis, gains, and losses inside each wallet instead of combining everything into one pool. This rule applies to all digital asset holders from January 1, 2025.
Form 1099-DA Requirements
Form 1099-DA gives the IRS a clearer picture of your crypto transactions. Brokers must report proceeds and other transaction details through this form. This helps the IRS match records and lowers the chances of reporting errors.
Safe Harbor for Unused Cost Basis
Revenue Procedure 2024-28 lets taxpayers assign unused basis to the digital assets they hold at the start of 2025. This transition rule helps you move from old tracking methods to the new wallet-based system in a clean and documented way.
Safe Harbor Allocation Methods Under Rev. Proc. 2024-28
Revenue Procedure 2024-28 gives taxpayers two clear ways to allocate unused cost basis before shifting to the new wallet-by-wallet system. These methods help you organize your digital asset balances, prepare accurate records, and meet the 2025 requirements without confusion.
1. Specific Unit Allocation
This method lets you assign unused cost basis to exact units of crypto in each wallet. You choose which units receive which basis amounts as long as your records support your choices.
What Taxpayers Must Do?
- Reconcile all crypto transactions through December 31, 2024.
- Prepare a complete list of unused cost basis.
- Take an inventory snapshot of each wallet on January 1, 2025.
- Allocate the basis before the first transaction of 2025.
This method works best for taxpayers who maintain organized records and can match specific units with detailed documentation.
2. Global Allocation Method
This method follows IRS rules that assign the highest-basis units to hosted wallets first and then to unhosted wallets. You cannot choose the order yourself; the rules decide it for you.
What Taxpayers Must Do?
- Agree to a global allocation method before January 1, 2025.
- Take a complete inventory snapshot of each wallet on January 1, 2025.
- Include all digital assets held in liquidity pools, staking pools, or third-party platforms.
- Finish the full allocation by the due date of the 2025 tax return.
This method works well for taxpayers who want a structured approach that relies fully on IRS rules.
IRS Revenue Procedure 2025-31: Staking Safe Harbor for Trusts
Revenue Procedure 2025-31 creates a special safe harbor that lets certain investment trusts stake their digital assets without losing their tax classification. This matters because many digital asset trusts want to offer staking while still keeping their status as investment trusts and grantor trusts. The safe harbor gives these trusts a clear framework so they can stake assets, earn rewards, and follow federal tax rules without risking their structure.
Who This Safe Harbor Applies To?
This safe harbor applies to investment trusts that hold a single type of digital asset and stake those assets on a proof-of-stake network. These trusts must trade on a national securities exchange and follow SEC rules about disclosures and liquidity.
Requirements Trusts Must Follow
- The trust must hold only cash and one type of digital asset.
- A custodian must hold the digital assets and manage the staking process.
- The trust cannot vary investments or try to time the market.
- The trust must follow exchange rules for liquidity and must keep enough assets unstaked for redemptions.
- Staking rewards must be paid to trust holders either in-kind or through cash proceeds.
Staking Rewards and Tax Treatment
The trust continues to own its staked digital assets at all times. Staking rewards come in the same asset that the trust already holds. The trust distributes rewards to holders on a regular schedule. These rewards follow normal tax reporting rules because the safe harbor does not change how the IRS taxes digital asset income.
What Crypto Investors Must Do in 2026?
Crypto tax rules continue to tighten in 2026, and investors need stronger records, cleaner tracking, and early preparation. Before filing 2026 taxes, every investor must follow the new wallet-based rules and stay ready for expanded broker reporting.
- Organize Wallet-Level Records: Keep clean records for each wallet, including gains, losses, snapshots, and transfer details to avoid 1099-DA mismatches.
- Review 2025 Basis Allocations: Check Specific Unit or Global Allocation entries to ensure an accurate basis that carries into 2026 filings.
- Match Records With 1099-DA: Compare your transaction data with broker-reported information to prevent IRS notices and reporting errors.
- Track All Crypto Income: Record the dollar value of mining rewards, staking payouts, and work-related crypto on the exact day received.
- Keep FMV Evidence for Every Event: Save price data, screenshots, and exchange-rate logs to support every transaction and protect your return during audits.
KoinX makes these 2026 requirements easier by tracking every wallet automatically, reconciling your cost basis, and matching your data with 1099-DA reports in seconds. Join KoinX today, keep clean records all year and stay fully compliant without the stress.
What Businesses Must Do in 2026?
Businesses that use, accept, or hold digital assets must follow stricter IRS rules in 2026. New reporting standards, wallet-level tracking, and stronger documentation requirements make clean records more important than ever. Below are the key steps every crypto-active business must take.
- Set Up Wallet-Based Systems: Track each wallet separately with its own gains, losses, and cost basis to meet 2026 requirements.
- Verify 2025 Basis Allocations: Review Specific Unit or Global Allocation records to prevent incorrect gains during 2026 disposals.
- Match Records With 1099-DA: Compare internal logs with every Form 1099-DA to avoid mismatches and potential IRS questions.
- Record Income on Receipt: Capture the dollar value of all crypto income at the exact time received for accurate basis tracking.
- Document Every Transfer: Keep clear proof of internal transfers to separate taxable events from simple wallet movements.
- Improve Payment Reporting: Issue required forms like 1099-MISC for contractor payments of $600 or more in digital assets.
Ready to simplify your crypto accounting? KoinX Books automatically links wallets and exchanges, sorts transactions, and generates crypto-ready reports in a few clicks. Book a demo today and keep spotless records with minimal effort.
How KoinX Can Help Investors and Businesses With Crypto Taxation?
KoinX gives both investors and businesses a clean and simple way to handle their crypto reporting. It connects wallets, tracks transactions, and generates IRS-ready reports without manual work. Investors get clear portfolio insights and automatic tax calculations, while businesses can manage accounting, compliance, and financial operations in one unified platform. Together with KoinX Books, it creates a complete solution for digital asset management, bookkeeping, and tax filing.
How KoinX Helps American Crypto Traders and Investors?
- Seamless Integration: KoinX connects with 800+ exchanges, wallets, and blockchains and detects inter-wallet trades across all your accounts without manual input.
- Compliant Crypto Tax Report: The platform generates IRS-ready tax reports that follow the rules for mining, staking, airdrops, and swaps.
- Portfolio Insights: KoinX unifies all your trading, DeFi, and wallet activity into one dashboard so you can analyze gains, losses, and performance in real time.
- Safe and Secure: Your identity and transaction history stay protected through end-to-end encryption and strong security standards.
How KoinX Helps American Business?
Focus on growing your business while KoinX Books handles your financial backbone.
- Unified Financial Platform: Manage crypto and non-crypto financial operations in one place, built for modern businesses with complex workflows.
- Real-time Financial Analytics: Access live insights to track performance, cash flow, and financial health without waiting for manual reports.
- Multi-currency Support: Record and report transactions across different currencies with automatic exchange-rate conversion.
- Automated Compliance: Stay compliant in every jurisdiction with built-in checks and updated regulatory rules.
- Team Collaboration: Give teams secure access with roles, permissions, and shared real-time updates.
- Enterprise-grade Security: Protect every financial record with advanced encryption, 2FA, and full audit logs for transparency.
Whether you manage your own crypto portfolio or run a business that handles digital assets, KoinX gives you everything you need in one place, from automated tax reports and real-time tracking to full-scale accounting and compliance through KoinX Books. Use KoinX today to stay accurate, stay organized, and stay fully compliant every year.
Conclusion
Crypto taxation keeps evolving each year, and the IRS now expects cleaner reporting, wallet-level tracking, and stronger documentation from both investors and businesses. Understanding each Revenue Procedure, from the early rules in 2014 to the major changes coming into effect for 2025 and 2026, helps you stay prepared and avoid costly mistakes. With the right tools and clear records, crypto tax filing becomes far more manageable.
KoinX gives you an easy way to stay ahead of these changes by automating your tracking, organizing your transactions, and generating accurate IRS-ready reports in minutes. Get started with KoinX to simplify your crypto taxes and stay fully compliant every year.
Frequently Asked Questions
How Does the IRS Treat Lost or Stolen Crypto in 2026?
The IRS does not allow most theft or loss claims as deductions. You must keep records showing when the asset went missing and how it happened. You may use these details when calculating gains if you dispose of replacement assets, but the loss itself usually does not reduce your taxes.
Do NFT Sales Follow Separate Tax Rules in 2026?
NFTs follow the same property tax rules as other digital assets. Gains and losses depend on your cost basis and sale value. Some NFTs may fall under collectible rules, which can change the tax rate, so you must check how each NFT fits under IRS classifications. For more information read How NFTs are Taxed in the USA?
Does Moving Crypto Into a Cold Wallet Create a Tax Event?
Transfers between wallets you own do not create taxable events. You must keep proof of both wallet addresses and the exact transfer details. Clear records help you show the IRS that the transfer was internal and not a sale or trade.
How Does the IRS View Airdrops in 2026?
Airdrops count as income on the day you receive them. You must record the fair market value at that moment. This value becomes your cost basis when you sell, trade, or spend the asset later. To learn more about airdrop taxation read How Are Crypto Airdrops and Hard Forks Taxed in the USA?
Can I Use Multiple Accounting Methods for Different Wallets?
You must use one consistent method for your digital assets unless IRS guidelines specifically allow a change. Some investors switch methods when they meet the rule requirements, but the IRS expects consistency across all accounts.
