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It's not difficult at all. This is 2023, we have spreadsheets, lol. You just generate a list of all transactions and losses/gains. Active traders have been doin

It's not difficult at all. This is 2023, we have spreadsheets, lol. You just generate a list of all transactions and losses/gains. Active traders have been doing this one way or another for a century now with stocks and derivatives. If cryptocurrency was actually used for purchasing goods/services it would be more tricky.

23B1 3y ago
Single transactions are easy to do. Extremely hard when your trading volume is substantial.
- xur17 3y ago
  Very true. I have a spreadsheet that tracks every trade I ever made, including fees. I export that into a csv, and feed it into another piece of software that produces a list of capital gains and losses each year. Some of the challenges: * Figuring out how to classify certain trades (wrapped versions of tokens, bridging assets between chains, staking, etc) * Making sure I have all trades tracked in the spreadsheet (there is automated software for this, but there are a number of ambiguous situations it doesn't hand well, hence needing to manually track it) * Spot checking wallets to make sure trades weren't missed
- PeterisP 3y ago
  How is that different? The transaction data export from most crypto-exchanges takes up the same amount of clicks no matter if you have 5 or 5000 transactions, as do the adding of whatever formulas you might need in excel to manage your business - which is obviously the case if your trading volume is substantial; if you were doing a substantial trading volume in, say, collectible card game cards, you'd also have to have a custom accounting process for tracking the goods you're reselling and how they appreciate, and you'd obviously have to record every transaction just as if you're trading in physical goods.
  - siftrics 3y ago
    You can do extremely complicated things on chain that require manual human analysis to figure out how to report it. You can do this thousands of times per year. It adds up to a huge amount of work.
    - yjftsjthsd-h 3y ago
      Forgive my ignorance; could you give an example of something that would be more complex, especially to the point of requiring human intervention? Does the tax code care about more granularity then that you started with X USD/Euros/BTC/ETH/... and ended with Y USD/Euros/BTC/ETH/...?
      - fullspectrumdev 3y ago
        The tax code in many countries does care - crypto to crypto exchanges that never touch FIAT can be taxable events
    - PeterisP 3y ago
      Part of the transaction costs for your trading business is properly accounting for these transactions; if that is a huge amount of work and makes the transactions unprofitable, well, don't do them. If you do complex transactions thousands of times per year, it would be reasonable to expect (and in many places be a legal duty) to figure out how you'll be accounting for these transactions in your books before the first transaction is made, and keep up to date bookkeeping for these operations continuously - not just making some reporting long after the fact. Like, such activities are so clearly above the level where either you hire a certified accountant or become a skilled accountant yourself, that's table stakes for doing such things. You're effectively running a business, so you're required to act like one, you're not permitted (generally, depends on jurisdiction) to just wing it.
- petertodd 3y ago
  With things like Lightning tipping, implemented on stacker.news and nostr, a normal person could easily do tens of thousands of tiny Bitcoin payments in a year, each with a theoretical capital gains reporting requirement. This is ridiculous, which is why most countries don't apply capital gains to currencies regardless of how volatile they are. Bitcoin should be treated no differently. You're already taxed on the income used to buy the currencies in the first place anyway.

23B1 3y ago

Single transactions are easy to do. Extremely hard when your trading volume is substantial.

xur17 3y ago
Very true. I have a spreadsheet that tracks every trade I ever made, including fees. I export that into a csv, and feed it into another piece of software that produces a list of capital gains and losses each year. Some of the challenges: * Figuring out how to classify certain trades (wrapped versions of tokens, bridging assets between chains, staking, etc) * Making sure I have all trades tracked in the spreadsheet (there is automated software for this, but there are a number of ambiguous situations it doesn't hand well, hence needing to manually track it) * Spot checking wallets to make sure trades weren't missed
PeterisP 3y ago
How is that different? The transaction data export from most crypto-exchanges takes up the same amount of clicks no matter if you have 5 or 5000 transactions, as do the adding of whatever formulas you might need in excel to manage your business - which is obviously the case if your trading volume is substantial; if you were doing a substantial trading volume in, say, collectible card game cards, you'd also have to have a custom accounting process for tracking the goods you're reselling and how they appreciate, and you'd obviously have to record every transaction just as if you're trading in physical goods.
- siftrics 3y ago
  You can do extremely complicated things on chain that require manual human analysis to figure out how to report it. You can do this thousands of times per year. It adds up to a huge amount of work.
  - yjftsjthsd-h 3y ago
    Forgive my ignorance; could you give an example of something that would be more complex, especially to the point of requiring human intervention? Does the tax code care about more granularity then that you started with X USD/Euros/BTC/ETH/... and ended with Y USD/Euros/BTC/ETH/...?
    - fullspectrumdev 3y ago
      The tax code in many countries does care - crypto to crypto exchanges that never touch FIAT can be taxable events
  - PeterisP 3y ago
    Part of the transaction costs for your trading business is properly accounting for these transactions; if that is a huge amount of work and makes the transactions unprofitable, well, don't do them. If you do complex transactions thousands of times per year, it would be reasonable to expect (and in many places be a legal duty) to figure out how you'll be accounting for these transactions in your books before the first transaction is made, and keep up to date bookkeeping for these operations continuously - not just making some reporting long after the fact. Like, such activities are so clearly above the level where either you hire a certified accountant or become a skilled accountant yourself, that's table stakes for doing such things. You're effectively running a business, so you're required to act like one, you're not permitted (generally, depends on jurisdiction) to just wing it.
petertodd 3y ago
With things like Lightning tipping, implemented on stacker.news and nostr, a normal person could easily do tens of thousands of tiny Bitcoin payments in a year, each with a theoretical capital gains reporting requirement. This is ridiculous, which is why most countries don't apply capital gains to currencies regardless of how volatile they are. Bitcoin should be treated no differently. You're already taxed on the income used to buy the currencies in the first place anyway.