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> I know the real cynical answer is that most people just don’t report correctly, but I’m curious how you’d do it if you wanted to be legit. If you want to fol

by koolba 3y ago

> I know the real cynical answer is that most people just don’t report correctly, but I’m curious how you’d do it if you wanted to be legit. If you want to follow the letter of the law, you need to consider each and every transaction in calculating your cost basis, converting to USD at each step. The latter is particularly problematic as it’s possible to transact in something that does not have a clear USD price. So the usual approach is that people just make up numbers, hopefully using some consistent methodology, and pray/hope/beg that if they get audited it’ll be enough to appease the IRS. Not having any standard way of getting the details is another problem. If each and every transaction is not recorded at the time of execution, good luck trying to get that detail back again.

jon-wood 3y ago
> Not having any standard way of getting the details is another problem. If each and every transaction is not recorded at the time of execution, good luck trying to get that detail back again. If only there were some sort of publicly available record showing transactions performed. (Yeah, I know, they don't include the USD value)
- koolba 3y ago
  > If only there were some sort of publicly available record showing transactions performed. (Yeah, I know, they don't include the USD value) I don’t even mean the USD value. I mean the raw transaction itself. In theory it’s persisted forever. In practice, the data is neither readily available nor searchable in the ways you’d actually need to properly account for transactions. On the flip side, if you can’t get the data there’s no chance the IRS would ever be able to figure it out right?
- petertodd 3y ago
  > If only there were some sort of publicly available record showing transactions performed. These days the majority of Bitcoin transactions by number probably happen on Layer 2 technologies, mainly Lighting, that do not record transactions directly in the Bitcoin blockchain. There is no publicly available record of Lightning transactions. It's quite difficult to even estimate how many are being done.
I_Am_Nous 3y ago
>If each and every transaction is not recorded at the time of execution, good luck trying to get that detail back again. I did some crypto trading on an exchange, and while it was able to give me the amounts I traded, it didn't tell me the price of those coins at the time of the trade, or my cost basis for when I got each coin to tell if that trade was a loss, gain, or wash. There was truly no way to be honest about those trades. Luckily I was only playing with small potatoes, it would be a nightmare if I traded in amounts the IRS would care about.

by koolba 3y ago

jon-wood 3y ago

> Not having any standard way of getting the details is another problem. If each and every transaction is not recorded at the time of execution, good luck trying to get that detail back again. If only there were some sort of publicly available record showing transactions performed. (Yeah, I know, they don't include the USD value)

koolba 3y ago
> If only there were some sort of publicly available record showing transactions performed. (Yeah, I know, they don't include the USD value) I don’t even mean the USD value. I mean the raw transaction itself. In theory it’s persisted forever. In practice, the data is neither readily available nor searchable in the ways you’d actually need to properly account for transactions. On the flip side, if you can’t get the data there’s no chance the IRS would ever be able to figure it out right?
petertodd 3y ago
> If only there were some sort of publicly available record showing transactions performed. These days the majority of Bitcoin transactions by number probably happen on Layer 2 technologies, mainly Lighting, that do not record transactions directly in the Bitcoin blockchain. There is no publicly available record of Lightning transactions. It's quite difficult to even estimate how many are being done.

I_Am_Nous 3y ago

>If each and every transaction is not recorded at the time of execution, good luck trying to get that detail back again. I did some crypto trading on an exchange, and while it was able to give me the amounts I traded, it didn't tell me the price of those coins at the time of the trade, or my cost basis for when I got each coin to tell if that trade was a loss, gain, or wash. There was truly no way to be honest about those trades. Luckily I was only playing with small potatoes, it would be a nightmare if I traded in amounts the IRS would care about.