US IRS tax reporting for cryptocurrencies


#262

Is it Ok if I use contracking.info for tax?


#263

I use the reports for capital gains tax off of cointracking.info. For my reporting here in the US I went through it with my CPA and he requested the income report and gains reports that cointracking.info creates.

He actually gave me a bit of a discount because I wasn’t handing him multiple sheets from the different exchanges it is one report. The discount that I got plus comparing his rates to others more than paid for the cost of cointracking.info. After talking with others and I am sure @Peter_Rehm will tell you that the more complicated and more time a CPA needs to spend on your taxes the more it will cost you. I am sure all are not equal, but this is really the case in business period.


#264

I use it. Helps tremendously.


#265

Yes, but it is free under 200 trades. Over 200 trades, we need to buy.


#266

I’m so glad I used a CPA. He said to expect a fee of around $350 but it’s so worth it knowing that he got my back if the IRS comes a knocking on the door.


#267

AMEN those were my exact thoughts.


#268

@Peter_Rehm…might this have an effect on crypto currency tax filing rules for 2017? Thanks again for your insight!


#269

Cryptostreet,
I don’t believe that this court decision will have any effect on tax filing rules or procedure for 2017. Generally the agencies stand behind the rules set out by other agencies that have been established for dedicated activities – such as the assessment and collection of taxes by the IRS.

I doubt it will have much of an impact in any regard because this merely confirms in law what the CFTC has said since 2015 – that it is the regulator of cryptocurrencies which it regards as a commodity. As Fortune magazine says the court “has upheld the idea that cryptocurrencies such as Bitcoin are commodities” and that they are not currencies that would be need to be regulated by the Treasury department (the Controller of the Currency exactly).

This ruling will now put some teeth into the CFTC’s enforcement actions which until now have been slowed by it’s murky legal standing. It will also mean that the CFTC will shortly be hiring some investigators whose only job it is to root out illegal actions in crypto.


#270

For example:

I bought 3 btc with total of $15,000 on 10/15/17
01/05/18: 3 btc is around $42,000. I have $27,000 unrealized gained, then I sold all 3 btc and buy ICX around $5. I have 8,000 ICX.
03/13/18: ICX is $3, and my account value is $24,000. I am still holding ICX.

For tax 2018, If I am still holding ICX until the end of 2018, I need to pay the tax of $42,000-$15,000 = $27,000 gain.

My question is should I sell ICX now, and buy ICX back so I can deduct from the tax of $27,000?

Now, If I sell ICX at 3$, I will have $24,000. I will have have a loss of $42,000 - $24,000 = $18,000. so my tax 2018 will be $27,000 - $18,000 = $9,000

Would you please let me know if I am correct? Should I sell or hold?


#271

First transaction is the difference between $42K and 15K
Second transaction is $16K ($5x8000 - $3x8000). Net gain is $11K using your numbers. Your math is very off.


#272

Each transaction is independent of one another and you have to take the difference from the cost basis versus the proceeds.


#273

Yes, it clearly sounds like you had a $27,000 tax gain of a short term nature that would be taxable in 2018.

What are your plans for those funds for the remainder of the year? At this point you have an $18,000 loss ($42,000 - $24,000) that you can possibly use against those gains (presuming nothing changes from here until the end of the year).

So net/ net right now maybe you should pay in some percent (say 15%) of the net current gain of $9,000 - @ $1,350 as an estimated tax payment for the first quarter of the year. I don’t know your exact tax circumstances so maybe you should bounce that off of your accountant.


#274

I just fixed. Thanks. However, I have a gain of $9,000. I dont know how you have $11,000 gain.


#275

Thanks Peter. Do you think should I sell now so I can have a gain only $9,000. If I dont sell, I will have a gain of $27,000. If I sell ICX and buy back ICX immediately, I think I will still have around 8,000 icx.


#276

I was using your numbers - $5x8000= $40000 not $42K. So extra $2K would be in the loss to get $9K


#277

Thanks Rebecca. I got your point. I just want to make some even number for my example. So 42k is the correct one.


#278

Tommy, on the part where you say

“If I sell ICX and buy back ICX immediately”

That would be an example of a “wash sale” and your $18,000 loss would not be allowed on your tax return.

If you were to sell it now and wait 31 days to re-buy it then your loss WOULD be allowed


#279

Yes, all cryptocurrency transactions are reportable, unless they are purchases of coin with USD, transfers between an exchange or wallet, or unless they’re in a self-directed retirement account (IRA LLC or Solo 401k).

Just HODLing a coin does not result in a taxable event. If you are a trader, miner, or required to file FBAR and other foreign reports, then you may still have to at least report the highest or end of year value of the currency held in non-US exchanges.

It’s worth noting that while Rod Lundquist, BSA Senior Analyst at the IRS said years ago that cryptocurrency was not required to file FBAR (which by the way, his comment does not constitute precedent but it’s all we had to rely on). FinCEN did provide guidance and I’ve read that some are being asked by the IRS to file these reports, so again consult with your knowledgeable CPA (or read my article - link below).

Well, I don’t know if I would describe myself as good. I hope my clients would use terms like kick-ass tax slashing crypto ninja. I am part of Sweeney Conrad, PS a CPA firm that has been rated the nation’s #1 and a top midsize CPA firm for years. What sets us apart from other CPAs is our focus on strategic tax planning and experience with larger clients and businesses.

My experience stems from securities, futures, and forex trading which establishes the principles for a lot of cryptocurrency reporting. I provide tax planning and reporting for traders, blockchain businesses, ICOs, mining pools, crypto funds, and just people in general who are making a killing in crypto but want to save taxes.

We also don’t mince words or play guessing games. I can talk straight about 1031 like-kind rules, what’s going on with hard forks, how to use self-directed retirement accounts, when to incorporate a LLC, and how to keep excellent records to make next year’s taxes a breeze.

While I’m located in Bellevue, WA my clients are spread out across the US, Asia, Europe, and Australia. If you have questions I would be more than happy to jump on the phone and have a quick call. We make time, even during tax season, to be available to answer questions for clients and provide outstanding, responsive expert advice.

Thomas Jones
425-301-1149
tjones@sweeneyconrad.com


#280

I have heard someone on youtube mention about binance. He said that if a person have coins on binance, the person needs to fill out a form that tell the irs that he/she owns coins on binance, also because binance is not in USA, so person needs to report that he/she own foreign account. If he/she doesn’t report, irs will fine him/her. Is it correct? I have no idea about this.


#281

That’s Incorrect.

But it may have been me that said that before the middle of January. There was confusion everywhere at the time. At that time a forum member was fortunate enough to contact the US Treasury Department and ask whether you had to file an FBAR form if you had crypto, of any denomination, offshore.

The place to go on the forum is:

My thanks for the dogged research goes out to @jidanni