Episode summary
Talking Trusts & Estates for Advisors: New Developments in Cryptocurrency
Summary
The discussion centers on the IRS’s new crypto reporting and basis rules, especially the shift from a universal basis approach to a wallet-to-wallet method. The guest says the practical effect is more meticulous recordkeeping: advisors and taxpayers now need to track which wallet each coin came from, rather than averaging basis across all holdings. He frames the change as more accurate because crypto is being treated like property, with each coin and wallet tracked separately.
On Form 1099-DA, the guest says the new reporting regime is both normalization and confusion. It reflects crypto’s integration into the tax system, but it also creates a transition period where brokers and taxpayers will make mistakes under evolving rules. He says the IRS is signaling that it wants more reporting and more tax revenue from digital assets, while allowing some good-faith leeway as the system matures.
The guest also says crypto gifting and estate planning now need to be handled deliberately. He notes that Bitcoin and Ether holders may prefer donating during life, realizing gains, or holding until death to get a step-up in basis. He argues digital asset access planning should be a standard part of estate planning because failing to document wallets, basis, and transfer mechanics could cost families millions.
Key takeaways
- The guest says the wallet-to-wallet rule makes crypto basis tracking more exact but far more labor-intensive than the old universal method.
- Form 1099-DA is, in the guest’s view, both a sign that crypto is becoming normalized and a source of short-term reporting confusion.
- For appreciated Bitcoin or Ether, the guest says advisors should compare lifetime gifting, taxable sale, and holding until death for a step-up in basis.
- The guest says Revenue Procedure 2024-28 still leaves taxpayers in an uncertain place on unused basis allocation and document retention.
- The guest says digital asset access planning should now be a core estate planning checklist item, not an optional add-on.
Notable quotes
“this is moving right. This has kind of moved away and now we're going to write my wallets which are really my online crypto storage is it will matter which wallet we sell from now to figure out our basis”
“it probably requires a little bit of background too if you're not familiar with some of the terminology”
“It's probably a bit of both. All these new things will create confusion”
“crypto is becoming normalized. Digital assets are becoming normalized and we are trying to pull really what is a new category of technology investing and assets into a tax system”
“100%. Uh digital estate planning is a new term that we throw around now in the financial planning and estate planning world”
How the episode opens
Hello, I'm Susan Lip, editor and chief of Trust and Estates, and I'm joined by Jamie Hopkins, CEO of Binmar Trust Advisors LLC and chief wealth officer of Binmar Trust. Today, we'll be discussing the new developments in cryptocurrency, including tax issues and reporting requirements. This is based on an article in the upcoming January issue of Trust and Estates, the new crypto playbook by Azriel Bear and Joshua Ashkenazi.
So, let's get started with my questions for Jamie. The article mentions that to report the cost basis on crypto, you must use the wallet towallet method instead of the previously used universal method. How does the shift from the universal method to the wallet towallet method fund fundamentally change cryptot tax planning?
Yeah, this this is a great uh question and it probably requires a little bit of background too if you're not familiar with some of the terminology. So um you know kind of this idea of universal is actually more similar to how we do other things uh would be you know that you look at your total crypto across all platforms and you add it all together to figure out your basis. Um so it doesn't matter if you had one uh I've got two phones on me so it shouldn't matter if I have one on my lefthand phone or my right hand phone.
It's universal. If I own crypto we add it all together. Um this is moving right.
This has kind of moved away and now we're going to write my wallets which are really my online crypto storage is it will matter which wallet we sell from now to figure out our basis. So on my right hand phone is wallet number one. If I sell crypto from this wallet, we will go back to the first in crypto that I bought on this wallet to figure out right what my basis is versus if I sell something from my lefth hand phone, we'll go into this wallet and see what my first basis was here.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- crypto tax planning
- cost basis reporting
- form 1099-da requirements
- crypto gifting vs death planning
- digital asset access planning
Companies and tickers mentioned
- Bryn Mawr Trust
Watch the episode
Watch “Talking Trusts & Estates for Advisors: New Developments in Cryptocurrency” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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