Tax Memo – Crypto Currency Year End Tax Planning

Why Would We Sell Crypto At A Loss?

If you feel that your crypto currency will not rebound, then taking the losses might be sound financial planning.

You may have other capital assets, including crypto, that you sold at a gain this year and you may be able to offset those gains with these crypto losses. 

On January 1 – Download All Income Tax Related Reports & Detailed Transaction Histories

As soon as the year ends, be sure to log onto all exchanges and wallets, and download all pertinent reports and detailed transaction histories. Be sure to save these in both pdf and excel formats if possible. If they are available, download your income tax related gain and loss reports for later reference.

Will The IRS Receive My Transaction History?

Even if you don’t get a year end form from an exchange, I am advising everyone to act as if they did. If anyone tells you to not report your transactions because the IRS will never know about them, IGNORE that person. Their advice puts you at grave risk.

All of this requires expert tax advice and coordination. 

To restate the main takeaways from this memo

1) You can only take losses on your crypto investments if you exchange them. Crypto you are holding that is decreasing in value, but not exchanged, will NOT give you a tax deduction. 

2) Assume the IRS will get all the details of your crypto transactions.