BTC US tax calculation for 2018?

[mikelexus]

Does anybody know how to do a tax return if you bought BTC in 2017 and sold in 2018?

I think, my situation is not uncommon I purchased around 3 BTC in total in December 2017 at around 16K, then I sold it later in 2018 at 6K

According to my research, the basic approach is to fill out form 8949 and attach it to 1040 Schedule D. The problem is that it spreads through more than 1 year, so I cannot do it automatically by exporting coinbase reports and using bitcoin.tax

I believe, I can use this formula: Total sale amount – basis = realized gain/loss
   
In my case, total sale amount is 3 * 6 = 18K

Now I need to calculate what the basis based on my transactions in 2017. But the problem is that I had numerous buy and sell transactions in 2017.

For example:
11/02/2017 BUY   0.8 BTC    $12K
11/04/2017 SELL  0.1 BTC    $11K
12/01/2017 BUY   0.5 BTC    $13K
12/07/2017 BUY   0.6 BTC    $14K
12/10/2017 BUY   0.7 BTC    $15K
12/10/2017 SELL  0.4 BTC    $15K
12/20/2017 BUY   0.5 BTC    $16K

so what would be the basis in my case?

is this the right approach overall?

PS: I am using Turbotax and bitcoin.tax. All my transactions were on coinbase

Thanks
M

[1714954495]

1714954495

[1714954495]

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[1714954495]

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[figmentofmyass]

Does anybody know how to do a tax return if you bought BTC in 2017 and sold in 2018?

I think, my situation is not uncommon I purchased around 3 BTC in total in December 2017 at around 16K, then I sold it later in 2018 at 6K

According to my research, the basic approach is to fill out form 8949 and attach it to 1040 Schedule D. The problem is that it spreads through more than 1 year, so I cannot do it automatically by exporting coinbase reports and using bitcoin.tax

I believe, I can use this formula: Total sale amount – basis = realized gain/loss
   
In my case, total sale amount is 3 * 6 = 18K

all of your transactions fall under "box c" on form 8949 since you have no 1099. i believe you can only aggregate all your different positions together if they were reported on a 1099. since they weren't, i believe you need to show the basis (and loss) for each lot you bought and sold. if you didn't sell in clear lots, then you can use one of these methods (FIFO being the simpler one): https://taxmap.irs.gov/taxmap/pubs/p538-001.htm#TXMP5501c5e3

the above formula is correct. if you bought 1 BTC at $12k, the basis is $12k. so if you sold that 1 BTC at $6k, the realized loss is $6k. each of these transactions comprises a line on the 8949. the net loss goes on lines 7 and 16 of schedule D.

now for the bad news: the maximum capital loss you can deduct (as you'll see on line 21 of schedule D) is $3000.

[mikelexus]

Thank you figmentofmyass! This is very helpful!
Do you know by chance, if can I use wighted average instead of FIFO to calculate basis for 2017?
it is hard for me to comprehend how FIFO works because I have 50 or 60 buy/sell transactions...

or is there any simple way to calculate FIFI in case of multiple SELL and BUY transactions?

[squatter]

Do you know by chance, if can I use wighted average instead of FIFO to calculate basis for 2017?
it is hard for me to comprehend how FIFO works because I have 50 or 60 buy/sell transactions...

or is there any simple way to calculate FIFI in case of multiple SELL and BUY transactions?

I don't think you can use a weighted average method. These are the available methods I'm aware of:

Average Cost    
First-In, First-Out (FIFO)    
Last-In, First-Out (LIFO)    
High-Cost, First-Out (HIFO)    
Low-Cost, First-Out (LOFO)    
Specific Lot Identification (SLID)

However, the average cost method is only available for mutual funds. I'm not sure if HIFO or LOFO can be used here either.

You might want to google for an Excel FIFO formula for capital gains. I'm pretty sure I've seen stuff like that around. I use specific lots myself since I don't trade very often.

[bones261]

now for the bad news: the maximum capital loss you can deduct (as you'll see on line 21 of schedule D) is $3000.

Yes, that is bad news. However, if your capital loss exceeds $3000 in a year you can carry over the loss in the next tax year(s). (In the US.)

[Alex_Zi]

What taxes? Does Bitcoin the legal currency or some real property rights in US? If not you have not to pay any taxes, I think.

[bones261]

What taxes? Does Bitcoin the legal currency or some real property rights in US? If not you have not to pay any taxes, I think.

In the US, the IRS considers cryptocurrency as property and every time you exchange your cryptocurrency for goods, fiat or another cryptocurrency, it is considered a taxable event.