U.S. crypto tax is insane, or my accountant is retarded

[Anonymous No.54475269]

Subject related. I used the full service option on TokenTax and punched everything in. They think I owe half a million dollars.
My income last year was 160k. I took 200k off exchanges, which now sits in my savings account. My current crypto portfolio is worth 30k. And they think I owe more than the sum of these three numbers.

They're fired. I'm going to just struggle through self filing or something.

[Anonymous No.54475313]

Have a site like Cointracker track all your crypto transactions and swaps from your private wallet, it can generate 8949 forms which will make more sense to accountants

[Anonymous No.54475334]

>>54475269
You cashed out crypto for USD and now have $200k sitting in a savings account making .25% interest? Buddy, you deserve everything coming to you.

[Anonymous No.54475365]

>>54475269
Let me guess. You did a bunch of day trading and gains were worth an excess of a million dollars but you only netted the sum you withdrew.
Good luck retard. Capitol loss only applies if you wait 30 days to get back into your position. Because you likely did a bunch of flash sales, the losses don't count, only the gains.
Hope you're ready for federal prison.
Not a joke.

[Anonymous No.54475423]

>>54475269
Get ready for your audit anon

[Anonymous No.54475435]

>>54475365
>Capitol loss only applies if you wait 30 days to get back into your position. Because you likely did a bunch of flash sales, the losses don't count, only the gains.
Scumbag stop lying

[Anonymous No.54475450]

>>54475269
get fucked paypig

[Anonymous No.54475644]

>>54475334
Do you have more of these WAGMI doodles? Is that your book or just a sketchbook?

[Anonymous No.54475674]

>>54475269
Welcome to crypto tax reporting hell, anon. We've been expecting you.

There is no token service that properly accounts all transactions. They can categorize a vast majority of them correctly, probably - but you will still have to go through and check each one manually. The reason it claims you owe more in tax than you earned, is because its considering a lot of transfers as zero cost basis income - which is clearly bullshit, because if anything you lost money paying transaction fees on those transfers. Transfers are not taxable events, so the cost basis should not change. If you transfered 10k of crypto, that was the cost basis, and on the other side you received 10k of crypto - fees. You will have to manually fix all of these in such a manner.

[Anonymous No.54475716]

why bother filing? let them tell you what you owe, half the time they are wrong and retarded

[Anonymous No.54475723]

>>54475269
Ugh sorry but I'm just not going to report my crypto-to-crypto transactions!

[Anonymous No.54475767]

>>54475674
This indeed seems to be what's going on, now that I'm going through the 450 page csv with a fine-toothed comb. For example, one time I LPed 100k worth of crypto in a swap pool, and withdrew it one week later at a 10kUSD loss. 100K in, 90k out. I can prove this with on chain data. The tax software somehow sees this as a profit of 90kUSD. Going to file an extension and spend lots of time fixing all this shit.

[Anonymous No.54475792]

>>54475723
This is what I wanted to do, but I worked for Avalanche, who doxxed all my on chain data to the IRS. "Hey you're going to have to report everything now lol". Fucking turkroaches.

[Anonymous No.54476226]

>>54475435
It's true. Wash rule used to not apply to crypto so you could just claim a lower cost basis and collect capital loss. Not anymore. Now you're getting fucked because you grossed over a million in gains but you're a degenerate gambler that lost nearly all of it.

[Anonymous No.54476246]

>>54475767
yep LP tokens are another case where tax reporting software goes full retard.

I've decided to manually track all of my transactions from current year forward. It incentivizes me to limit the amount of transactions I perform to only those I consider worth the hassle of having to tabulate in my excel sheets. All the cost basis, fees and realized gains etc. is tracked in that sheet as a single transaction vs all the miscellaneous transactions of transfer, approve, LP input/output etc. I just aggregate them by hand into one single trade at the moment I commit them.

[Anonymous No.54476281]

>>54475365
This is idiotic. Wash sale rules do not apply to OP's trading.

[Anonymous No.54476334]

>paying taxes

[Anonymous No.54476347]

>>54476281
You don't know that

[Anonymous No.54476353]

>>54475767
Thats exactly the problem I had. They don’t account for uniswap/lp positions correctly so I ended up with huge usdc ‘deposits’ with no cost basis. How the fuck can you have a stablecoin with no cost basis? Their software is retarded and the douchebags that run the company are overbooked so just tell you “file an extension and come back to it lol” you accrue interest daily on the extension, so theres another few K you’ll owe. I ended up finding another firm to do a post year audit - you only have 3 years after a submitted tax form to submit a change to it to try and claw back any overpayment.

T had the same problem

[Anonymous No.54476371]

>>54476246
I think this is wisest. Seeing a 450 page csv where most of the gains and losses were on the order of under a dollar made me realize I was over trading. Well. I already knew I was over trading. But I would not have guessed that badly.

[Anonymous No.54476388]

>>54476226
lol if the IRS tried to argue you owed more in tax than your total profit in front of a federal judge, they would have their asshole ripped open. That would be considered unfair by the legal standards they themselves proclaim, aka "all taxes should be fair and reasonable". Taxing someone like that is not fair and not reasonable by any existing standard.

[Anonymous No.54476470]

>>54476388
You're retarded. That's literally how it works. Go into a regular stock brokerage and try to day trade. Usually they warn you about the tax liability for this exact reason.
>Buy a security for $100
>Sell at $150 ake a profit of $50
>Next day buy back at $150
>Sell at a loss for $80
>Next day buy back at $80
>Sell a day later for $120
Your net profit is $20
Your gross profit is $90
You're taxed on the $90. The IRS doesn't give a fuck that you're a degenerate gambler.

[Anonymous No.54476503]

>>54476470
>these are the people giving you financial advice

Ahahahahahahahahaha

[Anonymous No.54476504]

>>54475269
yurofag here,

when you buy crypto always send to a new address, preferrably the on on a decentralized exchange, and exchange whatever you got into XMR. Have several wallets and make sure you don't flash them near your name.

E.g. I have 1 Exodus wallet. Exodus supports XMR and ETH. I purchase ETH on Coinbase, then I create an exchange transaction on a DEX swap website and move ETH to the DEX, then the DEX sends me XMR to my Exodus. Afterwards I can swap it there for ETH (I do suffer a loss, but it's a safety premium) OR I can repeat this exchange with the DEX ands wap XMR for ETH.

Alternatively, Exodus supports multi-address generation for BTC and XMR. Just by BTC and everytime you receive a sum, you get a new address to use.

This way they don't know if you bought or sold as long as you use non-KYC services to flip coins and stablecoins. E.g. have a Metamask wallet detached from your identity, and jump into and out of the ERC tokens and your exchange-facing wallet using BTC or Monero. Use the non-KYC anonymous exchanges.

Sounds too complicated? Enjoy prison then.

[Anonymous No.54476562]

>>54476503
>LALALALA I CAN'T HEAR YOU
You don't have to convince me. You have to convince the IRS.
https://www.forbes.com/sites/shaharziv/2021/03/26/robinhood-trader-may-face-800000-tax-bill/

[Anonymous No.54476602]

>>54476470

[Anonymous No.54476630]

>>54476602
See
>>54476562

[Anonymous No.54476652]

>>54476470
is this a joke?

[Anonymous No.54476719]

>>54475313
>Cointracker
Just signed up for this. Am I going to have to pay tax on £750m worth of shitcoin airdrops now?

[Anonymous No.54476776]

>>54476652
See
>>54476562

[Anonymous No.54476838]

>>54476246
could you help a non excel inclined anon with a template?
>t have csv exports, need somewhere to paste and clean them

[Anonymous No.54476880]

>>54476776
I read your article, and the "Wash Trade" rule only applies to securities, which no cryptocurrency has officially been declared as such. Fuck off with your concern trolling.

[Anonymous No.54476924]

>>54476562
According to a strict application of the wash sale rule, the stated liability would be true.

Yet such a strict application of the wash sale rule is not fair or reasonable. The purpose of the wash sale rule is to prevent tax loss harvesting, not to impose unfair/unreasonable taxes. Someone who day traded that much was clearly not performing sales (at least, the vast majority of their sales) in order to perform tax loss harvesting. They were doing as an ordinary course of their business - trading. Perhaps he didn't file his trading activity under the correct classification (out of a gorillion possible classifications), and thus it was all considered as intentional wash sales to harvest massive tax losses. Clearly that wasn't the intent. The liability would not hold in court, I am pretty fucking sure.

[Anonymous No.54476948]

>>54476880
He missed the cost basis raise as well lmao

https://corporatefinanceinstitute.com/resources/capital-markets/wash-sale/

[Anonymous No.54477020]

>crypto is worthless goy
>they backed by hope and wishful thinking
>you still need to pay us from your "gain" on that hope and wishful thinking tho
Only in america

[Anonymous No.54478105]

>>54475644
Not mine. Lifted this pic from another anon. I would love to see the notebook of this absolute mad lad.

>>54476470
The IRS can't find its ass with either hand. Retards that self report deserve this. Just download the CEX tax reporting docs and 1099K/MISC. Report that. No need to over think this. Don't forget to wash trade. And the only reason the faggot OP has this problem in the first place is because he dropped $200k cash into his bank. That requires some explanation.

[Anonymous No.54478993]

>>54475334
Yeah, gotta have it sitting in my account for mortgage lending "seasoning" rules, unfortunately.

[Anonymous No.54479042]

>>54478105
>Just download the CEX tax reporting docs and 1099K/MISC.

This is what I should have done btw. I did a bunch of on chain reporting at the recommendation of a previous reporter (retarded, I should have ignored them) and now the eye of sauron is on me forever. Maybe I just dump everything, get fresh wallets, and only do 1099s from now on.

[Anonymous No.54479242]

>>54479042
>Eye of Sauron
The IRS can barely spell crypto. Just reported what you are required to report and can be documented by the CEX. Some CEX have no US reporting requirements. Some CEX have almost non-existent KYC/AML. Nothing useful is being done with your taxes. Just pay what is required and nothing more. Don't over think it. And remember, harvest losses.

By the way learn defi and simply leave their system.

[Anonymous No.54479291]

>>54475269
If you used coinbase pro at all, tokentax will sometimes duplicate or triplicate your transactions.
Tokentax has been shit ever since they got complacent last cycle.

[Anonymous No.54479324]

Any defi transaction that isn't uniswap tends to also break.
Tokentax can really eat a dick.

[Anonymous No.54479368]

>>54479324
Yeah, I've been having way better luck with CoinLedger.

>>54479242
You're right, I need better exchanges and opsec. I got over paranoid that the IRS would rape me if I fucked up, and now I have *caused* the IRS rape, a self fulfilling prophecy. I hope this thread serves as a lesson to at least one other anon.

[Anonymous No.54479435]

>>54475269
So what I'm doing is logging the value of my account on January 1 and selling everything before December 31 and I will pay tax or claim a loss on the difference. All short term. If the IRS wants detailed trade I will send them my wallet address. They can suck my dick because they make this bullshit more complicated than it needs to be.

[Anonymous No.54479645]

>>54479368
I use to do some work for the IRS. I know at least one high level IRS lawyer who went to work for a big accounting firm. The IRS is chock full of retards basically executing scripts and prompts send down to them from management. You are just another SSN/TIN. Just do regular reporting and pay some taxes. They really don't care. They don't get paid enough to care. Just make a reasonable effort to look legit.

[Anonymous No.54479932]

>>54479435
Why don't you just game it?
>start with 1 BTC
>BTC dips 10%
>exchange to ETH - realising a loss of 10% which you can use to offset gains in the same year
>except ETH is also down 10% so you haven't actually lost anything
>keep doing this until you die
>cost basis gets stepped up upon inheritance

[Anonymous No.54480099]

>>54479932
I'm sorry anon but I think you're confused

[Anonymous No.54480118]

>>54480099
Why? Nice ID btw. Sounds like a rapper's name.

[Anonymous No.54480408]

>>54480118
I just don't understand what you're trying to suggest but I think what you're thinking does not make sense

[Anonymous No.54480761]

>>54480408
I think what the anon is trying to say
you buy 1 btc at $10k, while eth is $1k
btc rises to $15k, eth to $1.5k
if you sell btc to eth, now the taxman thinks you have made $5k profit in USD, even though you have the same amount of eth you would have had if you bought eth initally. So you didn't gain anything but you have realized a profit.

Why wouldn't that work in the opposite direction. Instead of btc rising, btc falls.
You sell your 1btc into 10 eth, but the dollar value is now, let's say, $5k. You still have the same amount of eth, but you have just realized a $5k loss.
Fuck them, if it works in the direction where they fuck you, why wouldn't it also work in the direction where you fuck them?

[Anonymous No.54482959]

>>54475269
Too bad, owning crypto in the US is fucked up, I wanted to move there before but I reconsidered my options, I better stay here in Portugal where I don't get taxed for crypto

[Anonymous No.54483181]

>>54475269
You didn't pay the 200K tax did you

[Anonymous No.54483709]

Serious question can the glowniggers track my ledger? What if I just put everything on there and claim all my funds were stolen from my wallets and exchanges?

[Anonymous No.54483725]

>>54482959
Last year it licensed Utrust one of the huge crypto payment platforms in the EU, so yeah it is perfect for crypto payment, I visited once and the place is cool too

[Anonymous No.54484206]

>>54475269
You didn't use bitcoin.tax?

[Anonymous No.54484337]

>>54483709
A lot of variables. Firstly, the IRS is too stupid/lazy to crawl a single blockchain, much less multiple blockchains. The IRS has more experience with the usual sorts of money laundering. Now, if you are a terrorist or major drug dealer, the FBI does have people and tools that can do this.

[Anonymous No.54485537]

>>54484206
Not familiar. Mostly have been using TokenTax and CoinLedger.

[Anonymous No.54485552]

>>54476719
How did you fuck up that?

[Anonymous No.54485571]

>>54476924
Got further sources on that? Not him, just curious.

[Anonymous No.54485633]

Does anybody know if I have to send them the transaction list? I have been but I'm just so tired. I'm thinking I'm gonna get my losses to a reasonable number (will still pay taxes because of staking income) and calling it a day. I've got like 4800 transactions to sort. Last year I sent them 500 pages of transactions. No joke.

[Anonymous No.54485756]

>>54485571
https://www.irs.gov/newsroom/taxpayer-bill-of-rights-10

>The Right to a Fair and Just Tax System
>Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely.
>Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

[Anonymous No.54485886]

>>54475365

wash sales don't apply to crypto you dumbass, IRS taxes it as property

[Anonymous No.54485932]

>>54476470

lmao i'm an accountant and this made me audibly kek, you are actually retarded, please don't ever trade

[Anonymous No.54485987]

>>54476470
Wash trades fall off after 30 days or so anyways so you're extra retarded

[Anonymous No.54487520]

>>54483709
You can reasonably claim you lost your wallet as long as you're not trying to buy stuff with it. I really think most people would be better off reporting every transaction honestly and just deducting the losses. It makes it a lot more convenient to save in 100% bitcoin. Bitcoin offers plenty of protection from government attacks without needing to resort to money laundering. It's the people saving in cash with a bank that need to worry. The government already knows where you live and they know you have crypto, so just enjoy the gains from holding, and have a passport in case things go to hell. Don't try to lie to the IRS. It's not worth it.

[Anonymous No.54487881]

>>54476371
>>54476246
This is basically what I had to do this year and honestly its the best option. As for LP tokens, I've been fucked by those as well but decided on just doing my taxes in a way that makes me over pay marginally on those transactions. Luckily I only ever played around in LPs with chump change, so I'm only having to over owe about $20-30 at the most. I can't imagine the hell people with $100k+ in LPs are going through.

[Anonymous No.54488279]

>>54475269
Koinly worked great for me

[Anonymous No.54489388]

>>54485633
I'm sending them a 450 page CSV in tiny font. Let them worry about it. Fuck em.