How TokenTax can help with tricky Crypto Tax situations
We’re in the midst of U.S. tax season right now, and this is the 2nd year that most people have had to figure out crypto taxes. If you made any trades at all during 2018, then you have some calculations to do and will have to file a 8949. If you only stuck to the major exchanges and traded major coins, then your life is simple — you have a variety of different tools and options available to help you make your capital gain/loss calculations. However, some of you face more complex situations if you:
Invested in ICOs which are now no longer tradable
Lost your private keys to a wallet
Lost your coins when an exchange was hacked
Used trading bots to do thousands of trades
Traded using margin
Tried out Bitcoin.Tax, CoinTracking, ZenLedger, etc. but can’t figure out for the life of you why their reports don’t match up
These are the edge cases in which TokenTax shines. We are confident that we can help you figure out all of those tricky situations and give you peace of mind. But first, let’s discuss some of the scenarios mentioned above.
Unfortunately, 2018 was not kind to ICOs, with the vast majority of them losing most of their value after hitting exchanges (if ever). Many exchanges have delisted coins that have faced low liquidity and some ICO coins were never even able to hit any exchanges.
If you bought a lot of tokens from an ICO and now there is no liquidity for you to sell it, we can help. You can send it to us (for $20 off a tax package and to realize your capital loss) or send it to our partner organization Docens, which will allow you to realize your loss while donating any potential proceeds to supporting financial literacy. This is important, because if you just continued to hold those ICO tokens, you would never be able to realize the loss and use it to offset your ordinary income (wages, capital gains, etc.).
Hacked exchanges or lost keys
Since crypto is a nascent industry, it still feels like the Wild Wild West sometimes. Holding your coins in exchanges can be risky, as we’ve seen several exchange hacks in 2018 (i.e. BitGrail with Nano). On the other hand, holding coins in your own wallet may be tricky as well since it requires a lot of tech savviness. If you lost coins due to an exchange hack or lost access to a wallet, there will be a gap in your crypto transactions that you will need to reconcile somehow for tax purposes. And you WANT to reconcile these because those will count as losses and you can use it to offset capital gains or ordinary income.
We can definitely help you reconcile these. Our accountants can help create “synthetic” trades to fill in missing cost-basis. On a high-level, these are done in a conservative manner, so it is guaranteed to pass IRS scrutiny. And you’ll have a complete set of crypto transactions without any gaps in cost-basis.
Advanced traders (bots, margin, etc.)
Some of you are more experienced traders and may have used bots to execute thousands of trades or margin traded on various platforms. If so, your situation definitely requires more care, and we can help.
We can handle millions of trades easily. Our accountants split your trades into chunks and process them separately to ensure that your cost bases are all accurate. We’ve worked with clients with thousands/millions of trades last year in 2018 so we are well equipped to help you out this year too.
Margin trading is another beast that we are well experienced at tackling. Many customers who have traded with margin on Poloniex, Bitmex, or Kraken had huge headaches trying to figure out how to calculate their crypto taxes using existing crypto tax sites/software. However, our support team is able to get missing data from exchanges and solve cases involving margin that no other crypto tax company could figure out (and we’re proud of it).
Different results from different crypto tax sites
Some of our customers tried us out after paying for a few other sites like Bitcoin.Tax, CoinTracking, ZenLedger, etc. and realized that they all give DIFFERENT results even with the same data input. This definitely is not good for your peace of mind if you’re trying to make sure your results are accurate and will withstand a potential tax audit.
That is something our customer support team can help with as well. Just give us your 8949 output forms from the other tax sites and we’ll dig into them, reverse-engineer transactions, and pinpoint exactly where the variances are. That’s how flexible our software is and how much we care about giving you confidence in our results.
Those are just some of the edge cases that we can handle. Of course if you’re just looking for an accurate software and an available support team, then we’d love to help you with any other scenario you may have. Be sure to join our Telegram Group if you have any questions. And we hope to see you around this 2019 tax season!
TokenTax does the work so you don’t have to.
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