As the October 15, 2025 tax filing deadline nears, taxpayers with digital assets need to focus on reporting those assets for the 2024 tax year. While Treasury and the IRS have sharpened their focus on tax reporting and the Senate Finance Committee is exploring future tax legislation on digital assets, the rules for reporting 2024 digital asset transactions generally remain the same as those in previous years.

To assist taxpayers with digital assets in managing their reporting and compliance obligations for 2024, this Tax Alert reviews the reporting requirements that apply to cryptocurrency transactions for tax year 2024.

Reporting requirements for tax year 2024 returns

In general

Notice 2014-21 classified virtual currency, which includes digital assets such as cryptocurrency, as property, not currency, for federal income tax purposes. This classification has not changed for 2024. This means that sales, exchanges or other dispositions of cryptocurrency and other digital assets (including stablecoins) in 2024 are still generally reported on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D. Taxpayers are responsible for tracking cost basis, dates and proceeds for each transaction, as brokers are not required to issue Forms 1099-DA for 2024.

Cost basis

Under the IRS's virtual currency FAQs, taxpayers may use either the specific ID method or the first-in-first-out (FIFO) method of accounting to track and report the cost basis of their digital assets. Taxpayers may use the specific ID method to designate the specific units of virtual currency sold or disposed in a transaction, if they can both (1) specifically identify the units involved; and (2) substantiate the adjusted basis of those units contemporaneous with the transaction(s) occurring.

To identify a specific unit of virtual currency, taxpayers may either (1) document the unit's unique digital identifier (such as a private key, public key or address), or (2) maintain records showing the transaction information for all units of a specific virtual currency held in a single account, wallet or address. These records must show:

• The date and time each unit was acquired
• Each unit's basis and the fair market value at the time it was acquired
• The date and time each unit was sold, exchanged or otherwise disposed
• Each unit's fair market value when sold, exchanged or disposed, and how much money or property value was received for each unit

In the absence of such specific identification, taxpayers must use the FIFO method. Under that method, the earliest acquired units of virtual currency are deemed to be disposed first.

To assist taxpayers (whether using FIFO or Specific ID) in transitioning to a wallet-by-wallet basis of applying their method of accounting in tax years 2025 and beyond (instead of the "universal" cost basis approach), the IRS is generally offering a one-time safe harbor opportunity for taxpayers to reallocate unused cost basis and document their cost basis by wallet as of December 31, 2024 (see Tax Alert 2024-1385).

Mining, staking and airdrops

Notice 2014-21, Q&A-8 requires taxpayers to include the fair market value (FMV) of the rewards in income at the time they first have dominion and control over the rewards (i.e., can transfer, sell or otherwise dispose). Under Revenue Ruling 2019-24, taxpayers receiving new units of cryptocurrency from an airdrop must include the units' FMV in gross income at the time they have dominion and control over the tokens. In Revenue Ruling 2023-14, the IRS clarified that cryptocurrency staking rewards are taxable income; as such, taxpayers that gain dominion and control over staking rewards in 2024 must include the rewards/FMV in their gross income and report that income on the 2024 Form 8949 and Schedule D.

Several commentators have argued the revenue ruling does not adequately address the tax treatment of staking rewards issued on certain chains, making reporting difficult. Before filing for 2024, taxpayers may want to consult with their tax advisors about the specific facts and circumstances of their staking activities to determine, to the extent possible, the appropriate tax treatment.

Stablecoins

Like other digital assets, stablecoins are treated as property under Notice 2014-21 and subsequent guidance. As no de minimis threshold currently applies to income tax reporting of cryptocurrency transactions, taxpayers transacting in stablecoins are subject to the same basis tracking and gain/loss reporting rules as other cryptocurrency assets.

Liquidity provision, digital asset lending

Current guidance does not clearly indicate how and when participation in liquidity pools or lending arrangements for digital assets is taxed. To determine whether an arrangement resulted in taxable income that must be reported in tax year 2024, taxpayers must analyze the specific facts of the arrangement, such as who retains ownership over the assets and what the repayment terms say, among other requirements.

Wash sales

IRC Section 1091 disallows certain losses on the sale of stock or securities where the taxpayer repurchases a "substantially identical" security within a 61-day window. These rules, known as the wash sale rules, do not explicitly apply to digital assets, which are generally considered property for tax purposes. They could apply, however, if the digital asset falls under the definition of a stock or security in the tax code. As such, taxpayers may need to analyze whether a specific digital asset is considered a stock or security, rather than property, for purposes of the wash sale rules.