As a guy who runs a crypto tax accounting firm, I have to say this is one of the best crypto tax guides I've seen.
We use CTC and just a few tips for the anons who plan to use it to DIY:
1)Sort your transactions chronologically - it's easier to see them in context than haphazardly in the "review" page.
2)If you are overwhelmed by the sheer number of transactions, start by adding "incoming" and "outgoing" as filters. This will show you ONLY the transactions CTC didn't algorithmically categorize. Use the "view in context" feature to find the transactions around it that might be related.
3)There are often "missing purchase history" transactions which contribute to overstated cap gains in CTC. Usually this comes from data import errors or an uncategorized cross chain bridge/swap. You can usually find these by going to "view balance" for the transaction with the missing purchase history, selecting "view ledger" and then finding where the balance first goes negative.
You may need to import data via csv if using exchanges like Kucoin/Binance which have incomplete APIs. You may need to "hard sync" the data source again to call the API again and hopefully pull the data off chain.
This process overall will probably take you about 1hr/100 transactions reviewed so plan accordingly. At this point if that sounds overwhelming just file an extension and keep farming airdrops while chipping away.
Also BTB - would be more than happy to give jungle a discount on accounting services and kick back to treasury.
Thanks for the article, it got me thinking about something that should be in the back of all our minds.
Quick open question to everyone here (this must be on some of your minds). This was just a random idea of mine.
In the US, there is a HUGE difference between taxes on short term capital gains (up to 37%) and on long-term capital gains. (up to 20%).
I've just been buying ETH and accumulating. However, I will likely want to sell some ETH if say it reaches my price target (say +$8k for a random number)
Is there anyway that once ETH reaches our price target of $8k, we could short the same amount of ETH in our portfolio in a trade, and then we're essentially market neutral, not making or losing anything if ETH price goes up or down. If we could do that and we only sell our ETH and close out the short position once our holding period is +1 year (so it counts as a long term capital gains, versus short-term capital gains?)
One of the concerns I have is the rehypothecation of ETH, and what exchanges would be stable enough to put our ETH in and also to hold the trade, as that would be a big risk in itself. I would be open to paying someone to help me through that if it's needed bc the tax implications are big.
Would appreciate any feedback you guys have, and if you have any ideas of your own.
IRS: we'll figure your tax penalty because that is too complicated for you to calculate
Also IRS: swapped these coins for an LP, got 10 more LP tokens, withdraw, swap back to the next meme coin plus leverage and have 400 other transactions with regular derisking to the gas token? Yeah, good luck figuring out the cost when you bought that ETH you sold for gas.
Just want to say thank you. First cycle I’ll actually walk away with more money than I put in because I am listening to you guys. Cashed out half of a double recently, feeling good about it. Already made more on that half reinvesting in zyn thanks to defi ed team. Thank you!
What happens when you ‘lose’ your keys and cannot access your crypto ever again? Does uncle sam still Tax you on it? And do you really think tax institutions are currently capable enough of tracking you onchain? I usually find them to be severely behind the curve
As a guy who runs a crypto tax accounting firm, I have to say this is one of the best crypto tax guides I've seen.
We use CTC and just a few tips for the anons who plan to use it to DIY:
1)Sort your transactions chronologically - it's easier to see them in context than haphazardly in the "review" page.
2)If you are overwhelmed by the sheer number of transactions, start by adding "incoming" and "outgoing" as filters. This will show you ONLY the transactions CTC didn't algorithmically categorize. Use the "view in context" feature to find the transactions around it that might be related.
3)There are often "missing purchase history" transactions which contribute to overstated cap gains in CTC. Usually this comes from data import errors or an uncategorized cross chain bridge/swap. You can usually find these by going to "view balance" for the transaction with the missing purchase history, selecting "view ledger" and then finding where the balance first goes negative.
You may need to import data via csv if using exchanges like Kucoin/Binance which have incomplete APIs. You may need to "hard sync" the data source again to call the API again and hopefully pull the data off chain.
This process overall will probably take you about 1hr/100 transactions reviewed so plan accordingly. At this point if that sounds overwhelming just file an extension and keep farming airdrops while chipping away.
Also BTB - would be more than happy to give jungle a discount on accounting services and kick back to treasury.
Thanks for the article, it got me thinking about something that should be in the back of all our minds.
Quick open question to everyone here (this must be on some of your minds). This was just a random idea of mine.
In the US, there is a HUGE difference between taxes on short term capital gains (up to 37%) and on long-term capital gains. (up to 20%).
I've just been buying ETH and accumulating. However, I will likely want to sell some ETH if say it reaches my price target (say +$8k for a random number)
Is there anyway that once ETH reaches our price target of $8k, we could short the same amount of ETH in our portfolio in a trade, and then we're essentially market neutral, not making or losing anything if ETH price goes up or down. If we could do that and we only sell our ETH and close out the short position once our holding period is +1 year (so it counts as a long term capital gains, versus short-term capital gains?)
One of the concerns I have is the rehypothecation of ETH, and what exchanges would be stable enough to put our ETH in and also to hold the trade, as that would be a big risk in itself. I would be open to paying someone to help me through that if it's needed bc the tax implications are big.
Would appreciate any feedback you guys have, and if you have any ideas of your own.
Thanks in advance and #WAGMI.
Note unrelated to the post.
Whale just bought 32m of ether and borrowed 22m DAI against it to buy more ether. Will probably borrow more I reckon.
It has begun.
Does anyone know if there is the ability within CTC to 'update' your cost base at the date when your tax residency changes?
IRS: we'll figure your tax penalty because that is too complicated for you to calculate
Also IRS: swapped these coins for an LP, got 10 more LP tokens, withdraw, swap back to the next meme coin plus leverage and have 400 other transactions with regular derisking to the gas token? Yeah, good luck figuring out the cost when you bought that ETH you sold for gas.
What if you delay your crypto tax and just file it a year later with the IRS? Is that possible?
Just want to say thank you. First cycle I’ll actually walk away with more money than I put in because I am listening to you guys. Cashed out half of a double recently, feeling good about it. Already made more on that half reinvesting in zyn thanks to defi ed team. Thank you!
Could we also have a post about friendly crypto countries and how to set base there and paying taxes on exit?
Thank you so much for a great post!!!
Most people ignore taxes. Eventually will be very painful for them. No brainer to use crypto tax software
What happens when you ‘lose’ your keys and cannot access your crypto ever again? Does uncle sam still Tax you on it? And do you really think tax institutions are currently capable enough of tracking you onchain? I usually find them to be severely behind the curve