Coinbase has launched a new tool for calculating taxes. This tool was introduced on March 13 and it allows users to calculate their gains and losses related to cryptocurrencies. As a reminder, gains on sales and exchanges of cryptocurrencies are taxable in the US.
First, customers need to create a balance sheet of all their digital asset transactions. Coinbase users can click here to generate a report with all the transactions related to their Coinbase account. This report provides your cost base for all your operations, including for Coinbase fees.
Note: The calculator is only available for US accounts.
Then comes the calculation of gains and losses. You can calculate your gains or losses by subtracting your base cost from the product of each sale or exchange of cryptocurrencies.
Coinbase has chosen to use a specific method for calculating gains and losses:
“For our customers who have only bought or sold digital assets on Coinbase, we offer a tool that automatically calculates your gains or losses based on a first-in-first-out (FIFO) accounting method. Note that FIFO is only one of several methods you can use to calculate your investment performance.
This tool provides a preliminary gain/loss calculation to assist our customers, but should not be used as official tax documentation without validating the results with your tax professional” says Coinbase
However, the number of users of Coinbase that can use the tool is limited. Indeed, the company announced in its website :
“Please note that this report will only be accurate for customers who have not made transactions outside of Coinbase. Do not use this report if you have:
- Bought or sold digital assets on another exchange
- Sent or received digital assets from a portfolio other than Coinbase
- Sent or received digital assets from another exchange (including GDAX)
- Stored digital assets on an external storage device (Trezor, Ledger, etc.)
- Participated in an ICO
- Previously used a method other than FIFO to determine your gains and losses.
Source : Coinbase