Starting 1/1/2025, the IRS is requiring wallet-by-wallet cost basis tracking for crypto assets (i.e. see https://www.reddit.com/r/CryptoTax/comments/1hk31yd/revenue_procedure_202428_safe_harbor_guide_what/). I'm having trouble wrapping my head around how that will work when moving assets between wallets, easiest to explain with specific examples:
Say you have accounts/wallets on exchanges A and B. You buy 1 unit in A -> Buy 1 in B -> Move 1 from A to B -> Sell 1 in B. Did you sell the lot from B (since it was "First In" to account B), or from A (since that was the first lot I purchased - i.e. like how it works with stocks)?
It seems like Rev Proc 2024-28 could be read either way:
"Account-by-account basis" just means tracking which units are in which accounts, but FIFO applies across all accounts (like stocks)
OR that "account-by-account basis" means FIFO applies separately within each account, because the doc focuses so heavily on wallet-by-wallet tracking and mentions "account-by-account basis" multiple times
Another example: Buy 1 in A -> Buy 1 in B -> Buy 1 in A -> Move 2 from A to B -> Sell in B in 3 lots of 1. Does it sell B, A1, A2? Or A1, B, A2?
And for a more real-world example: Say as of 01/01/2025 allocation, you start with 1 on exchange, call it lot E1, & 1 in cold wallet, call it C1. Buy 1 on exchange, call it E2. Move everything to cold wallet. Move 1 back to exchange & sell. Did you sell lot E1 or C1?
Thanks in advance - seems like there's lots of confusion around this
