Because alternative assets do not always have a single, universally accepted price, FMV reporting focuses on using reasonable, supportable data rather than perfect precision.
Exchange Based Valuations vs Custodian Reporting
For assets like cryptocurrency or publicly quoted metals, FMV is often based on exchange or market pricing as of year end.
Examples include:
- Crypto exchange prices on December 31
- Spot prices for precious metals
- Statements from trading platforms or vault providers
It is important to understand that custodians do not independently source or verify market prices. They rely on the value and documentation provided by the account holder.
MidAtlantic IRA reports FMV based on the information submitted, but does not determine market prices or select valuation sources on behalf of clients.
Volatility and Year End Snapshots
Many alternative assets experience significant price fluctuations. FMV reporting does not attempt to smooth out volatility or average prices over time.
FMV reflects:
- A snapshot in time
- The value as of December 31
- Available data at that specific moment
This means FMV may look very different from one year to the next, especially for volatile assets. That fluctuation does not create a tax consequence and does not require corrective action on its own.
What MidAtlantic IRA Can and Cannot Determine
To avoid confusion, it helps to clearly understand roles.
MidAtlantic IRA can:
- Report FMV using the value and documentation provided
- Maintain IRS compliant records
- Flag missing or incomplete submissions
MidAtlantic IRA cannot:
- Determine the value of alternative assets
- Choose valuation methods or sources
- Interpret market conditions
- Advise on investment performance
This distinction ensures neutrality and compliance across all accounts.
Documentation Matters
Supporting documentation should clearly show how the value was determined and reference a reliable source when possible. The goal is not to justify market movement, but to demonstrate that the reported value is reasonable and supportable.
Keep Perspective
FMV reporting for alternative assets is about accuracy and compliance, not judgment or taxation. Market ups and downs are a normal part of investing, and FMV simply records where things stood at year end.
When approached with this mindset, FMV becomes a straightforward reporting task rather than a source of stress.