Per-Wallet Cost Basis: What the IRS 2025 Rule Means for You
The IRS now requires per-wallet cost basis tracking starting January 2025. Learn what changed, how it affects your taxes, and how to comply.
What Changed in January 2025
On January 1, 2025, a significant IRS rule change took effect: cryptocurrency holders must track cost basis on a per-wallet, per-account basis rather than pooling all holdings universally. This requirement comes from Rev. Proc. 2024-28, published by the IRS in July 2024.
If you've been treating all your BTC across Coinbase, Ledger, and Trezor as one unified lot pool, that approach is no longer IRS-compliant. Each wallet and each exchange account must maintain its own separate cost basis records going forward.
The Old Way: Universal Pooling
Before 2025, many crypto holders (and even some tax software) pooled all lots of the same asset together regardless of where they were held. Under universal pooling:
- You bought 1 BTC on Coinbase in 2021 at $45,000
- You bought 1 BTC on Kraken in 2022 at $20,000
- Total pool: 2 BTC with an average cost basis of $32,500 (FIFO or average)
- When you sold 1 BTC from your Ledger wallet, you drew from the universal pool
This was operationally simple but the IRS never explicitly permitted it for crypto. Rev. Proc. 2024-28 formalized what was always the technically correct approach: tracking by wallet.
The New Way: Per-Wallet Tracking
Under per-wallet rules:
- Each wallet and exchange account has its own independent lot pool
- When you transfer BTC from Coinbase to your Ledger, the specific lot (or proportional lots) must move with the BTC
- Selling from Ledger uses only Ledger's lot pool — you can't offset with a low-basis lot sitting on Coinbase
- Transfers between your own wallets remain non-taxable, but they require lot-level tracking
This matters most for people who strategically choose which lots to sell. Under universal pooling, you might access any lot across all wallets. Under per-wallet rules, you can only access lots that are in the wallet you're selling from.
The Allocation Deadline: What Rev. Proc. 2024-28 Requires
Rev. Proc. 2024-28 provided a transition period. Taxpayers who had previously used universal pooling had until January 1, 2025 to allocate their existing lots to specific wallets. The allocation rules:
- You may use any reasonable method to allocate pre-existing lots to wallets (e.g., FIFO, highest cost, or a documented custom allocation)
- The allocation must be documented in your records — you cannot make it up at tax time
- Once allocated, the per-wallet tracking is permanent going forward
If you didn't formally allocate by January 1, 2025, the IRS default is FIFO allocation to each wallet based on acquisition date. Documenting your allocation method in writing (even retroactively) is still advisable.
How This Affects Tax Planning
Per-wallet rules have real implications for which lots you can access for tax-loss harvesting, long-term gain optimization, and cost basis method selection.
Consolidation strategy
If you want flexibility to access specific lots, keep those lots on the exchange or wallet where you're likely to sell. Transferring lots between wallets to access them is still possible, but requires proper lot tracking on the transfer.
Cost basis method by wallet
Under Specific Identification, you can now choose different cost basis methods per wallet — as long as you make the election before the sale and maintain proper records. This is a planning opportunity: HIFO on one wallet, FIFO on another, depending on your strategy.
Transfer fees and lot movement
When you transfer crypto between wallets, the transfer fee (e.g., network fee paid in ETH) is typically added to the cost basis of the transferred asset or treated as a separate disposal. Blockchain Smart Tax handles this automatically.
How Blockchain Smart Tax Enforces Per-Wallet Tracking
Blockchain Smart Tax was built with per-wallet tracking as a first-class concept from day one:
- Every wallet and exchange account maintains its own independent lot pool
- Transfers between wallets carry the specific lots (or proportional lots) to the destination wallet automatically
- Cost basis method selection is applied per-wallet
- The lot allocation history is preserved in full for audit purposes
- Transfer events are classified separately from disposals — they don't trigger taxable events
If you're migrating from software that used universal pooling, Blockchain Smart Tax can import your historical data and reconstruct a per-wallet lot allocation using any of the IRS-approved methods. Start with a free import to see how your existing records translate.
Handle Per-Wallet Cost Basis Automatically
Blockchain Smart Tax automates the hard parts of per-wallet cost basis — connecting to 550+ blockchains, classifying every transaction, enforcing per-wallet cost basis tracking (as required by the IRS), and generating the forms you need to file.
How we compare to other crypto tax platforms:
- Koinly ($49+/year) — established platform with strong exchange integrations and a large user community
- CoinTracker ($59+/year) — polished interface with strong Ethereum and exchange support
- CoinLedger ($49+/year) — competitive pricing with good NFT and exchange support
- Blockchain Smart Tax (from $25/year) — all cost basis methods free on every plan, automatic wallet discovery across 550+ chains, spam filtering, free during beta with 10,000 transactions
Start your free import — 10,000 transactions included during beta →