CoinVoice has learned that, according to Bitcoin.com, the IRS has released a temporary relief measure expected to benefit CeFi exchange users in 2025. This relief addresses concerns raised by the final version of the custodial broker regulations under Section 6045, which will take effect on January 1, 2025, requiring the use of first-in, first-out (FIFO) accounting for digital assets unless preferred methods such as highest-in, first-out (HIFO) or Spec ID are chosen.
Cointracker Tax Strategy Director Shehan Chandrasekera explained the issue, emphasizing that 'as of January 1, 2025, almost all CeFi brokers are not yet prepared to support Spec ID.' This lack of preparedness will force many cryptocurrency holders to default to FIFO accounting, potentially triggering higher tax burdens during asset sales. He described, 'In a bull market environment, this could be disastrous for many taxpayers, as you may inadvertently sell the assets you bought first (often with the lowest cost basis) while unknowingly maximizing your capital gains.'
The IRS's temporary relief allows taxpayers to continue using their own records or tax software to identify the specific units being sold. The relief period is only applicable to CeFi transactions from January 1, 2025, to December 31, 2025. After this date, taxpayers will need to formally select an accounting method with their brokers. Chandrasekera also emphasized the importance of synchronizing tax software with broker setups. [Original link]