Account Level Cost Basis

Get ready for the new IRS regulation for wallet-based crypto tax lots, starting January 1, 2025. Learn how to set your safe harbor date in Integral below.

What is the new IRS regulation and when does it come into effect?

The new IRS regulation requires that digital assets must now be tracked at the wallet level rather than on an account or exchange-wide basis. This regulation is aimed at improving the accuracy of tax lot reporting for digital asset transactions in the U.S. It comes into effect on January 1, 2025.

Does the new IRS regulation apply to my company?

The new IRS regulation requires that digital assets must now be tracked at the wallet level. If your company holds crypto or other digital assets in wallets or across multiple exchanges and is based in the US, this regulation likely applies to you. It impacts all businesses who report digital asset holdings in the U.S. If you are uncertain if this applies to you, we suggest reaching out to your accounting firm for guidance or to Integral for a referral to a firm that can support you.

What is a safe harbor and how do I choose my safe harbor date?

A safe harbor under the IRS Revenue Procedure 2024-28 allows taxpayers to reallocate unused basis in digital assets among wallets or accounts by the cut over date of January 1, 2025. This reallocation is treated as irrevocable and must meet specific record-keeping requirements, once you've chosen and approved a date, you cannot revert the change. To choose your safe harbor date before January 1, 2025, follow the below prompted steps in your Integral account:

Where do I go to initiate the changes in the app?

To initiate the changes required for compliance with the new IRS regulation:

1. Login to your Integral account

2. Head to Reports → select Cost Basis Report

3. There will be a banner at the top of the page, select → This Applies to me

Opt in or learn more about Safe Harbor

1. You will be prompted to select your Safe harbor date. Once submitted, this will lock in your crypto tax lots for IRS Reporting.

What is the process once I have chosen the Safe Harbor date in-app?

• Choose Your Safe Harbor Date: After selecting your safe harbor date, a seven-day waiting period ensures that all transaction data is up-to-date.

Safe Harbor date set

• Validation Process: The system automatically validates your tax data, which can take a few hours to a couple of days.

• Receive Safe Harbor Report: Once validation is complete, a safe harbor report will be sent to your account and made available for download as a CSV file.

Safe Harbor suggestion is ready

• Review Report: Review the CSV file. If you would like any changes to the allocation in the CSV, only the Selected Account ID column will need to be filled out. Any other changes made to the CSV will not be reviewed by Integral.

Only adjust the Selected Account ID column if changes are required

• Approval: If you'd like to approve, select Approve. If modifications are required, please make the changes and send them to the integral team.

• Finalization of Tax Lots: After approval and necessary adjustments, tax lots are created based on the validated data.

• Safe Harbor Complete: your tax lots have now been successfully allocated, and wallet-based accounting is now in effect for your Integral account.

Safe Harbor complete 🎉

How does Integral create the Tax Lot allocation suggestions?

We begin by identifying all tax lots that have not been fully drawn down as of the Safe Harbor date. We process these starting with the oldest tax lot and moving to the newest:

1. We allocate a tax lot to its origin wallet first.

2. If the origin wallet has already exceeded its allocation (i.e., the total tax lots assigned exceed the balance held for that token), we then allocate the tax lot to the wallet with the largest remaining balance (less allocated tax lots). If necessary, we will break up the tax lot into smaller lots to prevent over-allocating it to other wallets

3. If all wallets have been fully allocated, then we assign the tax lot to the origin wallet

Where do I reach out for further help from the Integral team if I have questions?

You can reach out to [e-mail]

Does Integral have any Accountant partners that I can reach out to for guidance?

Yes, please reach out to [e-mail]