Tracy Lee Posted March 26, 2022 Report Share Posted March 26, 2022 TP gave me his Coinbase Gain/Loss Report showing a Short term $1629.45 gain. No 1099 issued, even though Coinbase states that if he received $600 or more a 1099 would be issued. Should I enter this on Sch 1 Line 2 as Coinbase Crypto? SOME OF MY RESEARCH: 'However, the crypto universe is expanding fast — there’s just so much more to do than simply buying and selling, and crypto reporting can be tricky, as gains you receive from certain activities count as ordinary income. It’s important to note: you’re responsible for reporting all crypto you receive or fiat currency you made as income on your tax forms, even if you earn just $1. If you earn $600 or more in a year paid by an exchange, including Coinbase, the exchange is required to report these payments to the IRS as “other income” via IRS Form 1099-MISC (you’ll also receive a copy for your tax return).' Quote Link to comment Share on other sites More sharing options...
Lee B Posted March 26, 2022 Report Share Posted March 26, 2022 Form 8949 1 Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 26, 2022 Report Share Posted March 26, 2022 Think of crypto as any other stock except that you don't have wash sales. So, since you don't expect a 1099 from Fidelity Investments for stock sales, don't expect one from crypto exchanges. I have noticed that if use $10,000 of fiat to purchase a coin and you stake that coin and hodl it, this could happen. Let's say that the coin your purchased was luna coin. For staking, you get $200 in Luna and let's say that Luna made to the moon and you sell everything for $11,000. You will enter the basis for $10,000 and proceeds for $11,000, you will report $1,000 short term. I doubt the IRS will say anything because you didn't split the profit as $200 and $800. 1 Quote Link to comment Share on other sites More sharing options...
joanmcq Posted March 26, 2022 Report Share Posted March 26, 2022 You forgot reporting the $200 as income. Other income . Basis is $10,200. Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 26, 2022 Report Share Posted March 26, 2022 3 minutes ago, joanmcq said: You forgot reporting the $200 as income. Other income . Not really. You used your fiat to purchase some luna and you staked it. By staking it, you earned $200 worth of Luna. Now you have more Luna. You sell everything for $11,000. You report earnings of $1,000. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 26, 2022 Report Share Posted March 26, 2022 I have a new client with Coinbase. Her GainLossReport is empty. Her .csv spreadsheet GAINLOSSCSV is blank except for the headings. Her RAW data .cvs file has Buys, Rewards, and Convert. The Buys are not a problem until she sells and has to match up her basis. What is Reward? Is it Other Income? Interest? From earlier webinars, I thought a Reward is taxed as Other Income (although, the way they described it to me, it feels more like Interest). But I had a webinar last week and asked about Rewards, and the instructor compared it to credit card rewards that aren't taxable income but more a reduction of basis on the items you bought with your credit card. So, now I'm more confused instead of less. What needs to be tracked, what does the reward reduce? Or, is it increase? What is Convert? It includes US$ 898 ETH Convert and US$ 898 ETH2 as two separate lines, each labeled Convert? The grand total in the Cost Basis column includes both US$ 898 amounts. Did she convert US$ 898 of ETH to $898 of ETH2? Did she just double her basis? Is that taxable? Quote Link to comment Share on other sites More sharing options...
Sara EA Posted March 27, 2022 Report Share Posted March 27, 2022 On Coinbase, you can print an 8949. I don't have the instructions in front of me, but we've had several clients do it. Usually we just attach it as a pdf to the return. I see so many preparers trying to take this on themselves. NO! The clients are the ones who did all this crazy trading, and it is their responsibility to give us the data we need in usable form. Problems arise when clients have multiple wallets. Then we suggest they buy the expensive software to aggregate the data. No way we can do that--it would take a week for one return. When you tell them that they have to do it, mention that if you did it the fee would be in the thousands. And yes, if they earn crypto for staking or any other way, it is income (not capital gains). That income becomes their basis in the coins they got. 1 Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 27, 2022 Report Share Posted March 27, 2022 If staking is income and therefore not listed on form 8949 given by Coinbase, then you will have to read all those reports to hand pick it. These are a few things that will trigger a taxable event when the event is over or a sale occurs: (too many things that even we, preparers, don't know, so don't expect the regular taxpayer will know). Staking Coins given for opening an account Coin Airdrop "sale" of ether to pay for gas at a gain o loss liquidity pool investment coins given for playing in block chain Coins given for being part of a DAO Profits from coin appreciation Coins Given for mining. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 27, 2022 Report Share Posted March 27, 2022 My client's Coinbase Gain/Loss report says None for Total gains/losses. She sent me that plus two .csv files that I mentioned earlier: GAINLOSSCSV which is blank except for column headings and RAWTX. She seems to have downloaded everything available from Coinbase, because she also had 5 different forms in the W-8 series that she uploaded to me! Which brings up another question: Because Coinbase had available for her download W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY, are her coins held overseas, giving her FBAR and FATCA filing obligations. Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 27, 2022 Report Share Posted March 27, 2022 That's one of the features of crypto. They are decentralized and therefore they reside everywhere and nowhere. Technically you could have them in your pocket. I would think that they are like the million dollar pennies. You pull out all your change and look for the pennies that have extra value and go to the bank or where ever and cash those pennies. In this case you go to your computer, connect your hard wallet and your computer is like a branch of the bank and gives you the money. US citizens are not allowed to buy anything from some foreign exchanges such as binance.com. Binance.com had to open a "branch" called binance.us because of US regulations so I doubt FATCA will play any roll in crypto at the moment. Keep in mind that about only 5 percent of the population have crypto. Imagine when 90% of the population do. Our tax preparation will be changed and the sooner we embrace these changes, the better. In my list above, I forgot to mention NFTs and that's a whole new subject. From 1 to 10, I feel my confidence level is 1 when it comes to crypto and tax preparation... how about you? 1 Quote Link to comment Share on other sites More sharing options...
Lee B Posted March 27, 2022 Report Share Posted March 27, 2022 The problem will be our client's information given to us. I am confident about the tax side of crypto. However I am not going to babysit my clients. It's their responsibility to do the recordkeeping. https://www.coinbase.com/learn/your-crypto/tax-documents-explained https://www.coinbase.com/learn/crypto-basics/understanding-crypto-taxes https://www.coinbase.com/learn/your-crypto/understanding-crypto-income 2 Quote Link to comment Share on other sites More sharing options...
joanmcq Posted March 28, 2022 Report Share Posted March 28, 2022 The staking is indeed other income per the coinbase article. I have two clients I haven't started yet that my husband informs me they both have crypto. Ugh. Quote Link to comment Share on other sites More sharing options...
Lee B Posted March 28, 2022 Report Share Posted March 28, 2022 One of my clients came in this morning, didn't even know she was involved in crypto. She got in and got out in 2021 and she brought with her all of the necessary documents. 1 Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted March 29, 2022 Report Share Posted March 29, 2022 On 3/27/2022 at 10:10 AM, cbslee said: The problem will be our client's information given to us. I am confident about the tax side of crypto. However I am not going to babysit my clients. It's their responsibility to do the recordkeeping. https://www.coinbase.com/learn/your-crypto/tax-documents-explained https://www.coinbase.com/learn/crypto-basics/understanding-crypto-taxes https://www.coinbase.com/learn/your-crypto/understanding-crypto-income Judy, I am of the opinion that this should be pinned at the beginning as it is very valuable information that we all will need now or very soon. 1 Quote Link to comment Share on other sites More sharing options...
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