San Francisco-based, Coinbase has just launched a tax calculator. The American cryptocurrency exchange is the largest cryptocurrency company in the world and was most recently valued at $1.6 billion.
In a bid to respond to its users’ capital gains and tax calculation struggles, the calculator hopes to make life easier for users. The calculator has been launched in time for this year’s tax filing deadline, April 17. Some users can now include virtual currencies in tax returns to the Inland Revenue Service (IRS).
How it works
The calculator works on a first-in-first-out method accounting method and the Coinbase blog confirms, “For our customers who have only bought or sold digital assets on Coinbase, we offer a tool that automatically calculates your gains or losses”.
But can you use it?
Coinbase advises that there are some restrictions. All users may not be eligible to utilize the software due to these restrictions. Coinbase also warns that the calculator “should not be used as official tax documentation without validating the results with your tax professional,”.
So what are the restrictions that some users must face? You cannot use the calculator if you:
- Bought or sold digital assets on another exchange
- Sent or received digital assets from a non-Coinbase wallet
- Sent or received digital assets from another exchange (including GDAX)
- Stored digital assets on an external storage device (i.e., Trezor, Ledger, etc.)
- Participated in an ICO
- Previously used a method other than FIFO to determine your gains/losses on digital asset investments”
Additional implications for a tax calculator
The advent of this calculator carries additional significance for the exchange. In November 2017, Coinbase was ordered by a US judge to hand over the account information of its users which it fought. Ultimately, Coinbase was able to negotiate only handing over the information of users with more than $20K in their accounts. This represented about 13,000 Coinbase users at the time.
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