CoinBase now has a digital tool that calculates cryptocurrency capital gains or loss for their American customers be up-to date with IRS tax requirements.
In a blog post, the company said that the tool will generate a report which shows their capital gains or losses on its platform. They will implement this through a First-In-First-Out (FIFO) accounting system.
The FIFO system assumes that the first assets you bought are going to be first that get sold. The percentages are simply from the comparison of historical buying prices and current coin prices .This then informs a user of their net gains or losses.
Service Available Exclusively for CoinBase Customers
It is important to note that the tool comes with some caveats. It exclusively targets CoinBase account holders. Then again, account holders who have invested in ICOs are not eligible and CoinBase has a clear disclosure on tool use.
The exchange said:
“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”
The release comes after previous attempts by CoinBase to make a foray on the tax front. CoinBase often, even through the use of a banner to that effect, reminds their users that their coins gains are liable for taxation.
Internal Revenue Service Stipulations
There has always been controversy with regard to cryptocurrency and taxes. Following an announcement by the IRS, capital gains of Bitcoin and other digital assets are since subject to taxation.
The guidelines for the IRS regime-with regards to cryptocurrency taxation-gave platforms like CoinBase concern. In fact CoinBase is fully aware of the complications surrounding digital currencies.
This topic is also specifically weighty for CoinBase because it has come under the radar of the IRS before. In a lengthy lawsuit, the the agency sought information about US users suspected of evading tax.
CoinBase will eventually send data of approximately 13,000 users who made transactions on the platform between 2013 and 2015. This is in compliance with an order by a U.S. district judge in November 2017.
Nonetheless, this will be a great tool for CoinBase users, regardless of its limitations and disclosures. Most importantly,tax compliance is an essential civic duty and they are in the forefront pushing for compliance.