What are the best practices for reporting cost basis of digital assets to the IRS?

3 answers

• Dec 18, 2021 · 3 years ago
  As a Google white hat SEO expert, I can provide you with some best practices for reporting the cost basis of digital assets to the IRS. Firstly, it's important to keep detailed records of all your digital asset transactions, including the date of acquisition, purchase price, and any transaction fees. This will help you calculate the cost basis accurately. Additionally, you should use a reputable cryptocurrency tax software or consult with a tax professional who specializes in digital assets to ensure accurate reporting. Remember to report all your digital asset transactions on your tax return, including any gains or losses.
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• Dec 18, 2021 · 3 years ago
  Reporting the cost basis of digital assets to the IRS can be a complex task. One best practice is to use specific identification method, where you identify the exact digital asset units you are selling. This allows you to choose the units with the highest or lowest cost basis, depending on your tax strategy. Another best practice is to keep track of any hard forks or airdrops that you receive, as these may have tax implications. It's also important to stay updated with the latest IRS guidelines and regulations regarding digital assets.
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• Dec 18, 2021 · 3 years ago
  At BYDFi, we understand the importance of accurate reporting of digital asset cost basis to the IRS. One best practice we recommend is to use a reputable cryptocurrency tax software that can automatically calculate your cost basis and generate tax reports. This can save you time and ensure accuracy in your reporting. Additionally, it's important to keep track of any wash sales, as they can affect your cost basis. Remember to consult with a tax professional for personalized advice based on your specific situation.
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