{"id":5310,"date":"2025-01-03T03:08:52","date_gmt":"2025-01-03T03:08:52","guid":{"rendered":"https:\/\/dogewisperer.com\/?p=5310"},"modified":"2025-01-03T03:08:52","modified_gmt":"2025-01-03T03:08:52","slug":"irs-delays-new-crypto-tax-reporting-rules-until-2026","status":"publish","type":"post","link":"https:\/\/dogewisperer.com\/?p=5310","title":{"rendered":"IRS Delays New Crypto Tax Reporting Rules Until 2026"},"content":{"rendered":"
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The US Internal Revenue Service (IRS) announced a one-year delay in <\/span>the implementation of<\/span> new tax reporting requirements for cryptocurrencies. It is now set to take effect on 1 January 2026.<\/span><\/p>\n

The<\/span> postponement gives brokers more time to adapt to the regulations, which focus on determining the cost basis of cryptocurrencies on centralized platforms<\/span>, according to <\/span>an official announcement<\/span><\/a>.<\/span><\/p>\n

Initially<\/span> finalized in July 2024 by the IRS and Treasury Department, <\/span>the rules<\/span> aim to standardize how cryptocurrency sales are reported.<\/span><\/p>\n

EXPLORE:\u00a0<\/span>10 Coins with High Returns: Crypto Forecast 2025<\/span><\/a><\/strong><\/p>\n

Early Crypto Purchases Could Mean Higher Taxes<\/span><\/h2>\n

If investors do not select a specific accounting method, the First-In, First-Out (FIFO) approach will automatically apply. The method considers the earliest acquired crypto assets <\/span>as<\/span> sold first. It can have significant tax implications, especially in a rising market.<\/span><\/p>\n

Shehan Chandrasekera, Head of Tax Strategy at CoinTracker, pointed out practical challenges with the FIFO mandate. Most centralized finance (CeFi) brokers lack systems to support specific identification accounting, where users choose which cryptocurrency units to sell.<\/span><\/p>\n

Without this capability, crypto investors would be forced to follow the FIFO rule. Which means, they could potentially incur higher capital gains taxes by unintentionally selling assets with the lowest cost basis.<\/span><\/p>\n

Chandrasekera described this scenario as \u201cdisastrous,\u201d especially in a bullish market environment. He said it would maximize tax liabilities for many investors. <\/span><\/p>\n

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3\/ IRS recognized this issue and issued temporary transition relief (Notice 2025-7), today. \"\ud83d\udc4f\"<\/p>\n

This means, If you sell assets inside a CeFi broker, you can still use your books & records\/crypto tax software to document which specific unit you are selling.<\/p>\n

You won’t have to be\u2026<\/p>\n

\u2014 Shehan (@TheCryptoCPA) December 31, 2024<\/a><\/p>\n<\/blockquote>\n