Yes, the Revenue Procedure provides an explanation of what is considered a reasonable allocation plan. In short, the new plan must be adopted and added to your books and records before January 1, 2025. The plan cannot allow for discretion on how the funds are distributed after that date.

The specific unit allocation must be made before January 1, 2025, or the first sale in the tax year 2025. In order to complete this, your cryptocurrency transactions must be reconciled and up to date to make the allocation before or on January 1, 2025.

Starting in 2025, taxpayers must use the FIFO by-account disposal method. However, Specific identification can be used if the tax lot is chosen before the sale, books, and records are kept, and the broker is made aware of the tax lot being sold before the sale. Starting in 2026, brokers (exchanges like Coinbase) must dispose of (sell, exchange, transfer) the digital asset with the earliest acquisition date (FIFO method). Some brokers may allow the taxpayer to specify a different method to be used as a standing order (it is always done that way). Changing the standing order can have a dramatic impact on tax liability.

Here is the link to read the IRS Revenue Procedure 2024-28. Pay special attention to the definitions and the six examples at the end, illustrating how the rules are applied.

Yes, the safe harbor is only available for assets in your possession prior to January 1, 2025. In addition, the safe harbor does not apply to digital assets that are under consideration by a court in the United States, under review by the IRS Independent Office of Appeals, or subject to an IRS examination (audit) prior to January 1, 2025.