We’re thrilled to announce our partnership with CoinTracker to provide tax professionals the tools they need to serve their clients’ cryptocurrency tax needs accurately and efficiently.

Cryptocurrency continues to become more and more mainstream with over 46 million crypto holders in the US—roughly 22% of the US adult population. With the digital asset question front and center of the 2022 Form 1040, cryptocurrency has become a subject that every tax pro needs to know.

Keeping up with crypto compliance comes with its challenges. Most cryptocurrency exchanges do not issue Form 1099-B, and manually reconciling a client’s annual gains and losses is virtually impossible due to the sheer volume of crypto transactions, missing cost basis, valuation challenges, and complex DeFi and NFT transactions.

With this partnership, SurePrep is making this process easier for tax pros. CoinTracker connects with your clients’ crypto wallets and exchanges, automatically reconciles crypto activity, and generates gain and loss reports, providing you with Form 8949, Schedule D, and Schedule 1.

Undertaking your first crypto client may seem daunting, but we’re here to help. You can read this guide (How to Serve your First Cryptocurrency Tax Client) to learn more about serving crypto clients. SurePrep and CoinTracker also provide dedicated customer support to help tax pros every step of the way. To get started, just create an account here.

Now, you might be wondering “What’s considered a taxable crypto event?”

In the United States, cryptocurrency is taxed as property. Therefore, if the asset appreciates in value and if it is sold/traded/used for profit, the gains are taxed like capital gains. If the asset depreciates in value and it’s sold/traded/used at a loss, your client may be able to deduct the losses against other capital gains to reduce their taxes.

The amount of tax depends on how much capital gain/loss there has been on the asset, how long your client has held the asset, and the specific regulations in their country/jurisdiction. Because each taxable event may create a capital gain, you need to know the date, cost basis, sale value, and any fees associated with each transaction. CoinTracker takes care of these calculations for you and your client.

Generally speaking, these are considered taxable events:

  • Selling cryptocurrency for fiat currency (i.e. USD, CAD, EUR, JPY, etc.)
  • Trading cryptocurrency for other cryptocurrency (e.g. BTC for ETH—does not require cashing out to fiat to be taxable)
  • Using cryptocurrency to buy a good or service
  • Receiving cryptocurrency as a result of a fork or from mining

On the other hand, the following are generally not considered taxable events:

  • Buying cryptocurrency with fiat currency (except in cases where the purchase price is lower than the fair market value of the purchased coin)
  • Donating cryptocurrency to a tax-exempt organization
  • Gifting cryptocurrency to anyone (if the gift is sufficiently large it may trigger a gift tax)
  • Transferring cryptocurrency from one wallet that you own to another wallet that you own

As cryptocurrency holdings continue to become more common, it’s our goal to provide SurePrep customers and their clients with the tools they need to confidently navigate crypto tax compliance. We are delighted to partner with CoinTracker to provide this all-in-one solution designed to help tax pros find clarity in the gray areas and simplicity in the tangle of complicated transaction data.

Disclaimer: The information contained within this document is provided for informational purposes only and is not intended to and must not be taken as a substitute for obtaining accounting, tax, legal, or other professional advice from a tax professional (e.g., an Enrolled Agent, CPA, attorney, etc.). No warranty or representation, express or implied, is made by SurePrep LLC, nor does SurePrep LLC accept any liability with respect to the information and data set forth herein. Distribution hereof does not constitute legal, tax, accounting, investment, or other professional advice. You should consult a professional advisor prior to acting on the information set forth herein. 

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