CRYPTOCURRENCY TAX
TRANSACTION TYPES
Record Keeping
One of the most important messages to come from the sudden worldwide regulation on cryptocurrency is the importance of keeping records of all activity.
You are responsible for your own data and should be proactive in exporting copies of data from any exchanges and wallets that you use on a regular basis.
The Internal Revenue Code and regulations require taxpayers to maintain records that are sufficient to establish the positions taken on tax returns. You should therefore maintain, for example, records documenting receipts, sales, exchanges, or other dispositions of virtual currency and the fair market value of the virtual currency.
Additionally, keeping this data even after submitting tax returns for the relevant year is vital in aiding any potential IRS audits, finding cost bases for future tax returns, and allowing you to adapt to any changes in IRS guidance.
What if I have missing records?
There are many reasons for missing data - not taking records before leaving an exchange, historical data being unavailable, exchanges closing etc. The IRS have made it clear that responsibility for record-keeping lies with the user, so you should prioritise this moving forward.
Finding missing records is tricky and there are limited ways of finding your transaction history. A couple of suggestions:
- Check bank statements for any fiat deposits or withdrawals you may have made into or out of the account
- Check through any historical data that you do have to see if you can track any movement of assets across accounts/exchanges
- Get in touch with exchanges you no longer use to request data they may still have.
Unfortunately, sometimes missing data is simply untraceable and can only be identified as such.
You can create a custom account within the Recap app and try to collate the missing transactions from memory and using the hints above. You may get warnings of missing acquisitions which you would need to add manually.
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