Coinbase Has Launched Crypto Tax Calculator


One of the world’s largest crypto exchanges has launched a tax calculator. The San Francisco- based company Coinbase has made the announcement on 13 March via The Coinbase Blog.

The calculator aims to show users the real obtained gain or loss in order to keep their trading in accordance with U.S. tax requirements. Don’t confuse this opportunity with the tax advices. Coinbase isn’t authorized to manage this activity.

We understand taxes for digital currency can be complicated, so we updated our tax tools to make reporting easier. You and your tax professional can reference the steps below to prepare your tax filings.”, according to The Coinbase Blog.

According to the announcement, the calculator is useful in generating reliable data about profits or losses recovered on the platform. The results are based on the first-in-first-out (FIFO) accounting method.

The tool shows a few minuses. From this can mainly benefit users who have used the services offered by Coinbase, by buying and selling digital coins specifically on this platform and not for those who have purchased cryptocurrency from any other platform.

This tool provides a preliminary gain/loss calculation to assist our customers, but should not be used as official tax documentation without validating the results with your tax professional.”

Steps to prepare you tax filings

Firstly, you should revise all transactions made on the platform. Users are asked to access the Coinbase page to generate a report of all the activities they have done before: acquisitions, sales, receives and sends of digital assets.

This report provides your cost basis for all purchases and proceeds for all sales, inclusive of Coinbase fees. Remember, this report only details transactions associated with your Coinbase account.”

Secondly, you are now able to calculate your gains or losses. These are calculated simply and automatically, by extracting costs from the revenue that characterize the transactions made on the Coinbase platform.

At this step, as we mentioned above, the tool uses the First In First Out method. According to The Coinbase Blog, “This method assumes that the first assets you purchased are also the first assets you sold or exchanged. Your gain/loss is calculated based on the price you paid for the oldest assets in your portfolio, and the asset price at the time of sale or exchange.”

Below is an example of gain/loss calculation of ETH purchases and sells (source: The Coinbase Blog):

Thirdly, once you are done with calculations, you are able to file your taxes. Communicate with a specialist about the most appropriate method of reporting the information you have received.

This tool provides a preliminary gain/loss calculation to assist our customers, but should not be used as official tax documentation without validating the results with your tax professional.”

Remember, only those who have bought or sold cryptocurrency on Coinbase are able to use the tax calculator in order to generate their gains or losses based on FIFO accounting method.

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