Coinbase cryptocurrency exchange on Tuesday released new on-site tools to help its users calculate taxes on cryptocurrency gains or losses. The announcement made on The Coinbase Blog introduced the cryptocurrency tax calculator and gave guidelines on how users can determine how much tax they should pay while also reminding them of their tax obligations to the US government.
Coinbase Tax Guidelines
The obvious first step outline by Coinbase was for customers to create a complete view of all transactions. Through its tax-center, the Coinbase users can generate a complete report of their transactions with which they can proceed to calculate their gains/losses.
While the guidelines are in line with tax reporting guideline released issued by the IRS, the exchange noted that IRS isn’t specific when it comes to calculating trading gains/losses. The however preferred the two common approaches; namely the First in first out (FIFO) which its tax calculator uses and the Specific Identification (SpecID).
IRS Tax Summons on Coinbase
Coinbase cryptocurrency exchange was on the receiving end of a summons by the Internal Revenue Service (IRS) in 2014. They were asked to release details of about 500,000 customers for tax investigations for transactions between 2013 and 2015. Following a lawsuit, the court instructed Coinbase in November last year to release information of about 13,000 customers. Coinbase sent a notification to the customers last month that they would send their information to the IRS.
Recently, Coinbase has made several efforts to inform its user base to adhere to Tax requirements. Though its publications have always stated that it was not giving tax advice, it has come up with ways to enlighten customers about cryptocurrency taxes including a Tax FAQ page, a tax-center and now a tax calculator.
The exchange noted that the report was valid for customers who exclusively used Coinbase for their cryptocurrency trades. It referred users to file their taxes appropriately after consulting a tax professional.