Absolutely YES, you need a Safe Harbor Allocation Plan.

Here’s why.

The new IRS regulation 1.1012-1(j) contradicts the previous guidance issued in 2019 as Virtual Currency FAQ 39-41. This affects all CoinLedger users.

Why’s that?

The IRS claims that tax code section 1012(c)(1) has always required capital gain to be calculated using a “by-account” method. CoinLedger uses the “universal” method and has not offered the “by-account” method in the past.

Therefore, all CoinLedger calculations using the default setting are now inconsistent with the IRS’ interpretation of the tax law. The difference in results between these two methods can be significant.

Tax returns before 2025 with crypto income calculated using CoinLedger are vulnerable to substantial additional tax, penalties, and interest if audited.

This problem is not limited to CoinLedger. All crypto tax services used the universal method as their default.

Just turning this setting on is not sufficient to protect yourself.

What is the Safe Harbor Allocation Plan?

The IRS issued Revenue Procedure 24-28 to allow taxpayers to protect themselves by adopting a Safe Harbor Allocation Plan. This plan preserves your prior gain calculations starting in 2025 to avoid tax risk.

To avoid this tax risk, you must adopt a Safe Harbor Allocation Plan by the end of 12/31/2024. We make it easy to adopt. Just go to Cryptotaxaudit.com/1099 to sign up and learn more.

The Safe Harbor Allocation Plan allows you to preserve the unspent cost basis on your crypto inventory as of 12/31/2024. This significantly protects your prior tax returns during audits.

The Safe Harbor Allocation Plan can be used jointly with CoinLedger to report your crypto gains for 2025 and forward if they add support for the “by-account” method.

Absolutely YES, you need a Safe Harbor Allocation Plan.

Here’s why.

The new IRS regulation 1.1012-1(j) contradicts the previous guidance issued in 2019 as Virtual Currency FAQ 39-41. This affects most CoinTracker users.

Why’s that?

The IRS claims that tax code section 1012(c)(1) has always required capital gain to be calculated using a “by-account” method. CoinTracker calls this the “per-wallet” method. Until 2023, the default setting for this method in CoinTracker has been “universal”, meaning that a “universal” and not the “per-wallet” method. In 2023, Cointracker switched to a default per wallet method.

Therefore, all CoinTracker calculations prior to the 2023 tax year using the default setting are now inconsistent with the IRS’ interpretation of the tax law. The difference in results between these two methods can be significant.

Cointracker’s switch to “per-wallet” didn’t preserve prior-year calculations. Therefore, users are strongly advised to adopt a Safe Harbor Allocation Plan.

This means that if audited, tax returns before 2025 with crypto income calculated using CoinTracker are vulnerable to substantial additional tax, penalties, and interest.

This problem is not limited to CoinTracker. All crypto tax services used the universal method as their default.

Just turning this setting on is not sufficient to protect yourself.

What is the Safe Harbor Allocation Plan?

The IRS issued Revenue Procedure 24-28 to allow taxpayers to protect themselves by adopting a Safe Harbor Allocation Plan. This plan preserves your prior gain calculations starting in 2025 to avoid tax risk.

You must adopt a Safe Harbor Allocation Plan by the end of 12/31/2024 to avoid this tax risk. We make it easy to adopt. Just go to Cryptotaxaudit.com/1099 to sign up and learn more.

The Safe Harbor Allocation Plan allows you to preserve the unspent cost basis on your crypto inventory as of 12/31/2024. This significantly protects your prior tax returns during audits.

The Safe Harbor Allocation Plan can be used jointly with CoinTracker to report your crypto gains for 2025 and forward.

Absolutely YES, you need a Safe Harbor Allocation Plan.

Here’s why.

The new IRS regulation 1.1012-1(j) contradicts the previous guidance issued in 2019 as Virtual Currency FAQ 39-41. This affects most CoinTracking users.

Why’s that?

The IRS claims that tax code section 1012(c)(1) has always required capital gain to be calculated using a “by-account” method. CoinTracking calls this the “automatic depot separation” method. The default setting for this method in CoinTracking has been OFF, meaning that a “universal” method is used and not the “by-account” method.

Therefore, all CoinTracking calculations using the default setting are now inconsistent with the IRS’ interpretation of the tax law. The difference in results between these two methods can be significant.

This means that if audited, tax returns before 2025 with crypto income calculated using CoinTracking are vulnerable to substantial additional tax, penalties, and interest.

This problem is not limited to CoinTracking. All crypto tax services used the universal method as their default.

Just turning this setting on is not sufficient to protect yourself.

What is the Safe Harbor Allocation Plan?

The IRS issued Revenue Procedure 24-28 to allow taxpayers to protect themselves by adopting a Safe Harbor Allocation Plan. This plan preserves your prior gain calculations starting in 2025 to avoid tax risk.

You must adopt a Safe Harbor Allocation Plan by the end of 12/31/2024 to avoid this tax risk. We make it easy to adopt. Just go to Cryptotaxaudit.com/1099 to sign up and learn more.

The Safe Harbor Allocation Plan allows you to preserve the unspent cost basis on your crypto inventory as of 12/31/2024. This significantly protects your prior tax returns during audits.

The Safe Harbor Allocation Plan can be used jointly with CoinTracking to report your crypto gains for 2025 and forward.

Absolutely YES, you need a Safe Harbor Allocation Plan.

Here’s why.

The new IRS regulation 1.1012-1(j) contradicts the previous guidance issued in 2019 as Virtual Currency FAQ 39-41. This affects almost all CryptoTaxCalculator users.

Why’s that?

The IRS claims that tax code section 1012(c)(1) has always required capital gain to be calculated using a “by-account” method. CryptoTaxCalculator calls this the “by wallet and exchange” method. The default method setting in CryptoTaxCalculator is the “universal” method and not the “by-account” method.

Therefore, all CryptoTaxCalculator calculations using the default setting are now inconsistent with the IRS’ interpretation of the tax law. The difference in results between these two methods can be significant.

This means that if audited, tax returns before 2025 with crypto income calculated using CryptoTaxCalculator are vulnerable to substantial additional tax, penalties, and interest.

This problem is not limited to CryptoTaxCalculator. All crypto tax services used the universal method as their default.

Just turning this setting on is not sufficient to protect yourself.

What is the Safe Harbor Allocation Plan?

The IRS issued Revenue Procedure 24-28 to allow taxpayers to protect themselves by adopting a Safe Harbor Allocation Plan. This plan preserves your prior gain calculations starting in 2025 to avoid tax risk.

You must adopt a Safe Harbor Allocation Plan by the end of 12/31/2024 to avoid this tax risk. We make it easy to adopt. Just go to Cryptotaxaudit.com/1099 to sign up and learn more.

The Safe Harbor Allocation Plan allows you to preserve the unspent cost basis on your crypto inventory as of 12/31/2024. This significantly protects your prior tax returns during audits.

The Safe Harbor Allocation Plan can be used jointly with CryptoTaxCalculator to report your crypto gains for 2025 and forward.

Absolutely YES, you need a Safe Harbor Allocation Plan.

Here’s why.

The new IRS regulation 1.1012-1(j) contradicts the previous guidance issued in 2019 as Virtual Currency FAQ 39-41. This affects most Koinly users.

Why’s that?

The IRS claims that tax code section 1012(c)(1) has always required capital gain to be calculated using a “by-account” method. Koinly calls this the “wallet-based cost-tracking” method. The default setting for this method in Koinly has been OFF, meaning that a “universal” method is used and not the “by-account” method.

Therefore, all Koinly calculations using the default setting are now inconsistent with the IRS’ interpretation of the tax law. The difference in results between these two methods can be significant.

This means that if audited, tax returns before 2025 with crypto income calculated using Koinly are vulnerable to substantial additional tax, penalties, and interest.

This problem is not limited to Koinly. All crypto tax services used the universal method as their default.

Just turning this setting on is not sufficient to protect yourself.

What is the Safe Harbor Allocation Plan?

The IRS issued Revenue Procedure 24-28 to allow taxpayers to protect themselves by adopting a Safe Harbor Allocation Plan. This plan preserves your prior gain calculations starting in 2025 to avoid tax risk.

You must adopt a Safe Harbor Allocation Plan by the end of 12/31/2024 to avoid this tax risk. We make it easy to adopt. Just go to Cryptotaxaudit.com/1099 to sign up and learn more.

The Safe Harbor Allocation Plan allows you to preserve the unspent cost basis on your crypto inventory as of 12/31/2024. This significantly protects your prior tax returns during audits.

The Safe Harbor Allocation Plan can be used jointly with Koinly to report your crypto gains for 2025 and forward.

Absolutely YES, you need a Safe Harbor Allocation Plan.

Here’s why.

The new IRS regulation 1.1012-1(j) contradicts the previous guidance issued in 2019 as Virtual Currency FAQ 39-41. This affects all TokenTax users.

Why’s that?

The IRS claims that tax code section 1012(c)(1) has always required capital gain to be calculated using a “by-account” method. TokenTax uses the “universal” method and has not offered the “by-account” method in the past.

Therefore, all TokenTax calculations using the default setting are now inconsistent with the IRS’ interpretation of the tax law. The difference in results between these two methods can be significant.

Tax returns before 2025 with crypto income calculated using TokenTax are vulnerable to substantial additional tax, penalties, and interest if audited.

This problem is not limited to TokenTax. All crypto tax services used the universal method as their default.

Just turning this setting on is not sufficient to protect yourself.

What is the Safe Harbor Allocation Plan?

The IRS issued Revenue Procedure 24-28 to allow taxpayers to protect themselves by adopting a Safe Harbor Allocation Plan. This plan preserves your prior gain calculations starting in 2025 to avoid tax risk.

To avoid this tax risk, you must adopt a Safe Harbor Allocation Plan by the end of 12/31/2024. We make it easy to adopt. Just go to Cryptotaxaudit.com/1099 to sign up and learn more.

The Safe Harbor Allocation Plan allows you to preserve the unspent cost basis on your crypto inventory as of 12/31/2024. This significantly protects your prior tax returns during audits.

The Safe Harbor Allocation Plan can be used jointly with TokenTax to report your crypto gains for 2025 and forward if they add support for the “by-account” method.

Absolutely YES, you need a Safe Harbor Allocation Plan.

Here’s why.

The new IRS regulation 1.1012-1(j) contradicts the previous guidance issued in 2019 as Virtual Currency FAQ 39-41. This affects all TurboTax users.

Why’s that?

The IRS claims that tax code section 1012(c)(1) has always required capital gain to be calculated using a “by-account” method. TurboTax uses the “universal” method and has not offered the “by-account” method in the past.

Therefore, all TurboTax calculations using the default setting are now inconsistent with the IRS’ interpretation of the tax law. The difference in results between these two methods can be significant.

Tax returns before 2025 with crypto income calculated using TurboTax are vulnerable to substantial additional tax, penalties, and interest if audited.

This problem is not limited to TurboTax. All crypto tax services used the universal method as their default.

Just turning this setting on is not sufficient to protect yourself.

What is the Safe Harbor Allocation Plan?

The IRS issued Revenue Procedure 24-28 to allow taxpayers to protect themselves by adopting a Safe Harbor Allocation Plan. This plan preserves your prior gain calculations starting in 2025 to avoid tax risk.

To avoid this tax risk, you must adopt a Safe Harbor Allocation Plan by the end of 12/31/2024. We make it easy to adopt. Just go to Cryptotaxaudit.com/1099 to sign up and learn more.

The Safe Harbor Allocation Plan allows you to preserve the unspent cost basis on your crypto inventory as of 12/31/2024. This significantly protects your prior tax returns during audits.

The Safe Harbor Allocation Plan can be used jointly with TurboTax to report your crypto gains for 2025 and forward if they add support for the “by-account” method.

Absolutely YES, you need a Safe Harbor Allocation Plan.

Here’s why.

The new IRS regulation 1.1012-1(j) contradicts the previous guidance issued in 2019 as Virtual Currency FAQ 39-41. This affects all ZenLedger users.

Why’s that?

The IRS claims that tax code section 1012(c)(1) has always required capital gain to be calculated using a “by-account” method. ZenLedger uses the “universal” method and has not offered the “by-account” method in the past.

Therefore, all ZenLedger calculations using the default setting are now inconsistent with the IRS’ interpretation of the tax law. The difference in results between these two methods can be significant.

Tax returns before 2025 with crypto income calculated using ZenLedger are vulnerable to substantial additional tax, penalties, and interest if audited.

This problem is not limited to ZenLedger. All crypto tax services used the universal method as their default.

Just turning this setting on is not sufficient to protect yourself.

What is the Safe Harbor Allocation Plan?

The IRS issued Revenue Procedure 24-28 to allow taxpayers to protect themselves by adopting a Safe Harbor Allocation Plan. This plan preserves your prior gain calculations starting in 2025 to avoid tax risk.

To avoid this tax risk, you must adopt a Safe Harbor Allocation Plan by the end of 12/31/2024. We make it easy to adopt. Just go to Cryptotaxaudit.com/1099 to sign up and learn more.

The Safe Harbor Allocation Plan allows you to preserve the unspent cost basis on your crypto inventory as of 12/31/2024. This significantly protects your prior tax returns during audits.

The Safe Harbor Allocation Plan can be used jointly with ZenLedger to report your crypto gains for 2025 and forward if they add support for the “by-account” method.

These new regulations are the most significant change to crypto tax reporting since 2014. Here’s why:
- All crypto taxpayers will be affected.
- The IRS will be automatically informed of all your crypto sales and transfers on U.S. exchanges.
- Reconciling data from 1099-DA forms will increase the complexity of preparing crypto gain calculations.
- The IRS will learn your wallet address involved in transactions with U.S. exchanges.
- The 1099-DA information will make it easier for the IRS to detect taxpayers not reporting all their crypto income.
- Taxpayers not reporting their crypto income will have a significant increase in risk.

The IRS issued final regulations and procedures requiring U.S. custodial brokers (like Coinbase, Kraken, and Robinhood) to report sales and exchanges of digital assets (aka cryptocurrencies). These reports will be issued using 1099-DA forms beginning in January 2026 for the 2025 tax year.

Secondly, taxpayers must now use the FIFO-by-account method of tracking the cost basis of their assets, a radical departure from prior IRS guidance.

For each sale or disposal (exchange) of a digital asset, the form reports the asset name and quantity, the dates purchased and sold, the purchase and sale value in U.S. dollars, and whether the asset was held short- or long-term.

We expect taxpayers to receive a composite 1099-DA listing all the transactions for the year rather than a separate form for each transaction, similar to how brokerages issue a 1099-B.

The reporting of the purchase value (cost basis) will not start until the 2026 tax year, although exchanges must track the cost basis starting 1/1/2025. The same is true for transfers.

FIFO-by-account means that in determining the cost basis, the earliest purchased asset from the same wallet must be chosen. FIFO means “first in, first out.”
This is a method for determining the cost basis when a digital asset is sold or disposed of. Prior IRS guidance issued in 2019 allowed great flexibility in methods for determining cost basis.

Basis-tracking services like CoinTracking.info offered multiple methods like FIFO, LIFO, or HIFO. Secondly, these services used the universal (multiple wallet) wallet method rather than the by-account (single) wallet method.

The IRS issued Revenue Procedure 2024-28 to guide taxpayers' smooth transition to the FIFO-by-account basis accounting method.

The procedure explains two ways taxpayers may allocate the unused basis of remaining assets to existing units of digital assets held within each wallet or account of the taxpayer as of January 1, 2025.

A safe harbor is a legal provision to sidestep or eliminate tax liability in certain situations, provided that the conditions of the revenue procedure are met.

An allocation plan that reasonably satisfies the conditions of Revenue Procedure 2024-28 would be a safe harbor allocation plan. Those conditions are:

(1) Safe harbor does not apply to digital assets acquired by or transferred to a taxpayer on or after 1/1/2025.
(2) Safe harbor does not apply to assets under consideration before any U.S. court, the IRS Independent Officer of Appeals, or IRS examination prior to 1/1/2025
(3) The digital asset must be a capital asset in the hands of the taxpayer (see tax code section 1221)
(4) The digital asset unit from which the unused basis is derived and the remaining digital asset unit must be the same type of digital asset (i.e. Bitcoin)
(5) The taxpayer must be able to identify and maintain records sufficient to show the total number of remaining digital asset units in each of the wallets or accounts held by the taxpayer. This means you must keep evidence with a date stamp. Just saying that “it is on the blockchain” or “the exchange has the records” is not adequate.
(6) The taxpayer must be able to identify and maintain records sufficient to show the number of units of unused basis, the original cost basis of each such unit of unused basis, and the acquisition date of the digital asset unit to which the unused basis was originally attached.
(7) The taxpayer must treat any allocation under the Revenue Procedure 2024-28 as irrevocable for all purposes of tax code section 1012.

The two types of allocation plans permitted are called Specific Unit Allocation and Global Allocation.

A Global Allocation plan makes an allocation based on rules prescribing how units of unused basis will be ordered and then allocated to a pool of remaining digital asset units within each wallet or account. At CryptoTaxAudit, the Safe Harbor Allocation Plan we recommend is a global allocation plan type.

A Specific Unit Allocation plan requires the taxpayer to allocate specifically identified units of unused basis, by reference to characteristics that distinguish those units from other units of unused basis, to either a pool of remaining digital asset units within each wallet or account. This allocation must be made before any sale, trade, or disposal occurs in 2025. At CryptoTaxAudit, we consider the specific unit allocation plan type to be unreasonable and burdensome for little additional benefit except in very rare cases. Read example 3 in the Revenue Procedure to understand the unworkable complexity of a specific unit allocation plan.

If a taxpayer fails to adopt a Safe Harbor Allocation Plan by 12/31/2024, the IRS will apply the FIFO-by-account basis method to calculating crypto gains, ignoring whatever method the taxpayer may have used in prior years. This could result in additional tax liabilities, penalties, and interest, which could be significant.

It's important to understand that IRS FAQ questions 39 and 40 regarding specific identification are non-binding to the IRS. The taxpayer is not protected without a safe harbor allocation plan.

No, but if you are subject to an IRS examination or audit, they may request the plan and see proof that the plan was adopted by 12/31/2024.

This is a list of the original, per-unit basis of a digital asset unit other than any unit previously identified and used. Accordingly, all units of digital asset basis held by the taxpayer as of January 1, 2025, are treated as units of unused basis for purposes of the revenue procedure, even if the taxpayer can factually attribute some units of basis to specific units of digital assets.

Some basis-tracking online services allow the user to generate a year-end report of the unused basis. If the physical inventory doesn’t match the unused basis inventory, corrections may be needed to adjust for missing transactions.

The Revenue Procedure requires that the taxpayer take a complete inventory of all units of digital assets in his possession as of 12/31/2024, whether on hosted or unhosted wallets.

A hosted wallet is a custodial service that electronically stores the private keys to digital assets held on behalf of others.

An unhosted wallet is a non-custodial means of storing, electronically or otherwise, a user’s private keys to digital assets held by or for the user. Unhosted wallets, sometimes referred to as self-hosted or self-custodial wallets, can be provided through software that is connected to the internet (a hot wallet) or through hardware or physical media that is disconnected from the internet (a cold wallet).

The taxpayer must keep records such as screenshots or reports, preferably with date stamps, showing the number of units of digital assets in each wallet. The name of the wallet should be evident. For hosted wallets, the records should note the exchange name, type of digital asset, and account name (email id).  For unhosted wallets, the screenshot or report should list the type of digital asset, the number of units in each wallet, and the wallet address. Along with a date stamp before 1/1/2025.Some basis-tracking online services allow the user to generate a year-end report of the unused basis. If the physical inventory doesn’t match the unused basis inventory, corrections may be needed to adjust for missing transactions.

A global allocation must identify and order all units of unused basis by reference to characteristics that distinguish those units from all other units of unused basis and must allocate those ordered identified units to a pool of remaining digital asset units in each of the taxpayer’s wallets or accounts on a prescribed basis outlined in the rule.  CryptoTaxAudit’s Safe Harbor Allocation Plan does this for you.

For example, a global allocation might identify those units of unused basis with the earliest or latest acquisition dates and, for each of those dates, the highest or lowest amounts of unused basis, and allocate such units successively to wallet A, wallet B, and wallet C.

An allocation that permits the taxpayer to exercise discretion on or after January 1, 2025, regarding how units of unused basis are allocated to remaining digital asset units or to the taxpayer’s wallets or accounts is not a global allocation within the meaning of this revenue procedure.

A global allocation is complete on the date that the taxpayer’s books and records first record the specific characteristics of the units of unused basis allocated to each pool of digital assets in the taxpayer’s wallets or accounts on a wallet-by-wallet or account-by-account basis.

The taxpayer must adopt a method for his books and records before January 1, 2025.

Our recommended Safe Harbor Allocation Plan is a complete global allocation method that best meets the needs of investors. Adopt this plan by 12/31/2024. Then document a complete snapshot inventory of your crypto assets on 12/31/2024.

You must do the mapping of unused basis to the inventory, but most taxpayers have until October 15, 2026 (if an extension is filed) to complete the mapping.

Our plan maps your oldest assets (which should have the lowest cost basis) to your unhosted wallets (like a ledger) first, then maps the newest assets to hosted wallets (on an exchange). This helps you put your oldest assets on your HODL wallets to maximize the opportunity for long-term capital gain.

Exchanges do not report your inventory of assets. Starting in 2025, exchanges must report every transaction where an asset is sold, exchanged, or disposed of. Exchanges are required to record every purchase and transfer.

Starting in 2026, the regulations require exchanges to report two additional pieces of information on Form 1099-DA. First, they must report the cost basis, if known, of each sale transaction. Second, they will start reporting the transaction ID and the digital asset address of the to and from wallets.

Non-custodial DeFi transactions, including liquidity pools, staking pools, and smart contracts, are not being reported, although the IRS intends to require them in the future if they can figure out how to do so.
Starting in 2026, the regulations require exchanges to report two additional pieces of information on Form 1099-DA. First, they must report the cost basis, if known, of each sale transaction. Second, they will start reporting the transaction ID and the digital asset address of the to and from wallets.

Non-U.S. exchanges (brokers or dealers) are not required to report to the IRS. However, the OECD proposes that countries adopt the CARF proposal (Crypto Asset Reporting Facility) to facilitate the intercountry exchange of transaction information between countries. Currently, the U.S. has not agreed to the CARF yet.

Because the 1099-DA reports all sale/exchange transactions and (starting in 2026) all transfers, the IRS will now automatically know your US-based transactions. The wallet information will give the IRS clues to identify your unhosted wallets and foreign exchange accounts.

If they wanted to, the IRS could use this wallet information, combined with blockchain analytic tools and cluster analysis, to reconstruct a person's portfolio at any point in time in the past and identify transactions that were made. This can be compared to the tax return to see if a taxpayer has complied. The IRS did this to indict Roger Vers (Bitcoin Jesus) for tax fraud.

This information enables the IRS to do more preliminary investigation on your crypto income reporting without having to start an audit to get that information. This will allow them to better target taxpayers for audits.

In 2022, the Treasury Department issued a directive to increase the audit rates on taxpayers with total positive income (TPI) greater than $400,000. For crypto investors, Total positive income includes rewards and proceeds for crypto sales/exchanges without considering the cost. Many crypto investors have a TPI in excess of $400,000.

With the new information provided by the 1099-DA forms, taxpayers should strive to get into and stay in tax compliance.

CryptoTaxAudit offers a unique service called Tax Shield. One benefit of this service is an audit risk consultation to develop a strategy for transitioning to compliance.

Digital asset investors will have additional complexity reporting their crypto-related income on their tax returns. They will still need to use basis-tracking services (like Cointracking.info) to track the basis with these differences:

(1) If you have a safe harbor allocation plan, you load the basis mapping spreadsheet like a set of manually entered transactions. Then load only wallet transactions starting from 1/1/2025. Previously, you would have had to load all transactions from the past. This has the benefit of eliminating problems caused by incomplete historical records.

(2) The transactions reported on the Form 1099-DA must be removed from the basis-tracking service to avoid duplicate reporting.

1. Here are four easy ways to reduce the complexity and burden of calculating crypto-related income on the tax return.
   
   (1) Stop using unhosted wallets and keep all assets in the custody of a U.S. exchange. This is exactly what people do with stocks. They buy stocks, hold them, and then sell them from the same brokerage account. The benefit is that the brokerage 1099 form will provide all the details needed for tax return preparation. This is super easy. Most crypto investors don’t trust an exchange to hold their assets. As the saying goes, “Not your keys, not your crypto.” The collapse of the FTX exchange is an example.
   
   (2) Simplify your wallets. Those who have invested for a long time may have accumulated unused hosted and unhosted wallets with some assets. Consolidation and “spring cleaning” will reduce the complexity of tracking.
   
   (3) Protect your HODL assets using a three-wallet strategy. The biggest technique for reducing your taxes as an investor is to hold assets for more than a year before selling in order to benefit from the reduced long-term capital gains tax rate. Unfortunately, the FIFO method always wants to sell the oldest assets in a wallet first, reducing the chance of holding assets for more than a year. The solution is to have multiple wallets. One of these wallets is your HODL wallet for holding assets you don’t plan to sell in the next year. A second wallet is your trading wallet which could be a hosted wallet on an exchange. A third wallet is a transition wallet where assets go that you no longer want to hold in the trading wallet but aren’t sure you want to hold them long term.
   
   (4) Use a full-service gain calculation company to prepare the crypto portion of your tax return. For medium- to high-frequency traders, the increased accuracy of a professional calculation usually pays for itself through reduced taxes. CryptoTaxAudit provides this service. Schedule a call to see if it is the right solution for you.