Why Coinbase can't provide accurate tax information to millions of users

[bobthebuildr]

This article sums it up pretty well.... - Coinbase customers are getting screwed on tax reporting

https://www.cryptotrader.tax/blog/coinbase-taxes

[jackg]

Is it not enough to download your transaction history and try to sort this out yourself, or better still, keep a running count of how much in value you have put in and how much of value you have taken out.

It's helpful to only use one or two exchanges for depositing cash onto as you can calculate your losses much more easily then (and you don't have to kyc in so many places).

[squatter]

This article sums it up pretty well.... - Coinbase customers are getting screwed on tax reporting

https://www.cryptotrader.tax/blog/coinbase-taxes

It's not only Coinbase -- they're just the biggest. Gemini and Kraken treat tax reporting the same way, with Form 1099-K. For tax year 2019, there will probably be more exchanges joining their ranks too.

Is it not enough to download your transaction history and try to sort this out yourself, or better still, keep a running count of how much in value you have put in and how much of value you have taken out.

I've completed thousands of tax returns and I have to say, dealing with cryptocurrency transactions is somewhat onerous, especially when compared to stock brokers who send clients a 1099-B with reported cost basis.

Once you start mixing in spending on goods and services, altcoin trades and several different exchanges -- some of whom don't provide adequate records or if they do, in really bad formatting -- it can become overwhelming. Coinbase actually has one of the better formats for filled order history that I've seen.

[Theb]

I doubt that is what causing Coinbase on having an inaccurate calculation on your taxes. If the inflows of the intial cryptocurrencies is the the problem why don't they just create a software where they leave out the succeeding transactions from the trades of their clients and the user itself will be the one inputting the value they have bought the cryptos for. It's a simple solution where the clients only have to do one thing and that is to apply the purchase cost of their crypto. There will be no time wasted for both sides if this happens.

[audaciousbeing]

Is it not enough to download your transaction history and try to sort this out yourself, or better still, keep a running count of how much in value you have put in and how much of value you have taken out.

It's helpful to only use one or two exchanges for depositing cash onto as you can calculate your losses much more easily then (and you don't have to kyc in so many places).

This is the right way and best way to even go about it as relying on third party to handle your tax returns for you is the height of being an unpatriotic citizen and knowing fully well that if anybody is going to be punished for it, its not going to be the third party and the excuse of outsourcing that responsibility of yours will not fly with the tax authority.

Although, I also don't totally agree that what Coinbase will be sending will be inaccurate because to a large extent there will not be manual computations which give room for error especially when there is human intervention in the process and the moment its going to be computed by a software that has been tested to handle the volume of their users and the complexities of their transactions, then its worth to be given a shot rather than shutting it down from the start.

[Harlot]

Is it not enough to download your transaction history and try to sort this out yourself, or better still, keep a running count of how much in value you have put in and how much of value you have taken out.

It's helpful to only use one or two exchanges for depositing cash onto as you can calculate your losses much more easily then (and you don't have to kyc in so many places).

Yeah, I just don't get why the crypto traders and even the news are trying to put the blame on Coinbase or for any crypto exchange in that matter on why they can't compute their taxes right, after all the exchange really don't have any kind of obligation to do so. Stock brokers and Foreign Exchange brokers don't calculate your taxes for you why should you expect crypto exchanges to do it for you. It's like putting up a task that they aren't required to do so. It would be easier for the client to rely on their own calculations since they are the ones who keep all the records of their transactions if they don't do it then they better start doing so because you can't rely this crypto exchanges to give an accurate calculation for you.

[jackg]

I've completed thousands of tax returns and I have to say, dealing with cryptocurrency transactions is somewhat onerous, especially when compared to stock brokers who send clients a 1099-B with reported cost basis.

Once you start mixing in spending on goods and services, altcoin trades and several different exchanges -- some of whom don't provide adequate records or if they do, in really bad formatting -- it can become overwhelming. Coinbase actually has one of the better formats for filled order history that I've seen.

Do you not just report one figure for capital gains?

We do that here (afaicr), it's why I don't go through my history on every exchange and instead just tally up the assets I have at the end of the year.

Gains = Assets from this year (at close) - earnings - assets from last year (at close)? Trouble comes when you have to try to come up with the fiat value for what all your gains are at the time you sold holding for them but generally a monthly average should suffice if you can remember for the large trades (For the small ones I wouldn't worry, a best quess will suffice or if you feel paranoid you can always go with the highest price of the year (or 75% of it) if you want to cover yourself.



I made a thread recently about portfolio managers and blockfolio does pretty well at tracking what you trade when you import data from an API (but it keeps updating rates after a trade is complete as it stores the fiat rate) but it's something to consider if you want a more accurate overview (other sites must do the same too) make sure the keys are set to read only though

[figmentofmyass]

Stock brokers and Foreign Exchange brokers don't calculate your taxes for you why should you expect crypto exchanges to do it for you. It's like putting up a task that they aren't required to do so.

brokers in the USA are required to send form 1099-B to the IRS (and the taxpayer):

Brokers must submit this form for each person who sold stocks, options, commodities, and other trading vehicles. The IRS requires the submission of Form 1099-B to function as a record of a taxpayer’s gains or losses associated with the brokered sale or trade of certain securities.

the 1099-B requirements don't extend to crypto exchanges (yet anyway) but the IRS is obviously pushing them to issue the 1099-K at least, which informs them that you at least own crypto.

[LawrenceParks]

I've completed thousands of tax returns and I have to say, dealing with cryptocurrency transactions is somewhat onerous, especially when compared to stock brokers who send clients a 1099-B with reported cost basis.

Once you start mixing in spending on goods and services, altcoin trades and several different exchanges -- some of whom don't provide adequate records or if they do, in really bad formatting -- it can become overwhelming. Coinbase actually has one of the better formats for filled order history that I've seen.

Do you not just report one figure for capital gains?

We do that here (afaicr), it's why I don't go through my history on every exchange and instead just tally up the assets I have at the end of the year.

Gains = Assets from this year (at close) - earnings - assets from last year (at close)? Trouble comes when you have to try to come up with the fiat value for what all your gains are at the time you sold holding for them but generally a monthly average should suffice if you can remember for the large trades (For the small ones I wouldn't worry, a best quess will suffice or if you feel paranoid you can always go with the highest price of the year (or 75% of it) if you want to cover yourself. tellpizzahut



I made a thread recently about portfolio managers and blockfolio does pretty well at tracking what you trade when you import data from an API (but it keeps updating rates after a trade is complete as it stores the fiat rate) but it's something to consider if you want a more accurate overview (other sites must do the same too) make sure the keys are set to read only though

If the inflows of the intial cryptocurrencies is the the problem why don't they just create a software where they leave out the succeeding transactions from the trades of their clients and the user itself will be the one inputting the value they have bought the cryptos for. It's a simple solution where the clients only have to do one thing and that is to apply the purchase cost of their crypto. There will be no time wasted for both sides if this happens.

[jerry0]

Have a coinbase account but never used it.  So they only send you that document if you did over a certain amt of transactions or over a certain amount?