2017 Crypto Tax Reporting Guide

Reporting your 2017 Cryptocurrency Activities

If you sold, exchanged, or used cryptocurrency to purchase goods or services during 2017, the IRS requires you to report these transactions on your 2017 tax returns.


Provided below is a brief questionnaire to get you started, along with a downloadable tax summary template for tracking cryptocurrency gains/(losses). The summary below is in PDF format, Excel is also available.


1. During 2017, did you Sell Cryptocurrency for Fiat (USD)?

If yes, you will need to calculate and report the taxable gains/(losses) for all 2017 transactions (note: you may be able to export part of this data from the crypto exchange you used).

Prepare a summary of your 2017 transactions and list the following for each transaction:

  1. Cryptocurrency name/description
  2. Number of coins sold or exchanged
  3. Date purchased. If unknown, indicate whether short term (1 year or less) or long term (>1 year)
  4. Date sold
  5. Cost basis in USD (purchase price + fees paid to purchase)
  6. Sales price in USD (sales price - fees paid to sell) 

*NOTE: a template/example summary is available below

2. During 2017, did you Exchange Cryptocurrency for Cryptocurrency?

If yes, you will need to calculate and report the taxable gains/(losses) for all 2017 transactions. See #1 above.

3. During 2017, did you make Purchases Using Cryptocurrency?

If yes, you will need to calculate and report the taxable gains/(losses) for all 2017 transactions. See #1 above.

4. During 2017, did you Mine Cryptocurrencies?

If yes, additional details will need to be provided and reviewed (more info to come). It will likely qualify as a business reported on Schedule C.

5. Did you Sell, Exchange, or Make Purchases Using Cryptocurrency in Prior Years?

Consider whether you could have reporting issues for prior years. Send e-mail or DM for help if you have doubts (no charge for general questions).

2017 Summary Template - Cryptocurrency Tax

2017 Tax Summary - Cryptocurrency Transactions (pdf)

Download

IRS Forms for Cryptocurrency Investors/Miners

Forms 1040 / 1040A / 1040EZ

If you have cryptocurrency gains or losses to report on your individual tax return, file either Form 1040 or Form 1040A

(you cannot file Form 1040EZ if you are reporting cryptocurrency gains or losses)


Link to Form 1040:

https://www.irs.gov/pub/irs-pdf/f1040.pdf


Link to Form 1040 Instructions:

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf


Schedule D

Schedule D is a summary of your capital gains and losses, including cryptocurrencies when held as capital assets (this is the most common for individual investors). Form 8949 is used to provide additional details.


Link to Schedule D:

https://www.irs.gov/pub/irs-pdf/f1040sd.pdf


Link to Schedule D Instructions:

https://www.irs.gov/pub/irs-pdf/i1040sd.pdf

Form 8949

Form 8949 is a more detailed view of your capital gains and losses, and your totals flow to Schedule D. 

FYI: Taxpayers may make an election to attach a separate statement in lieu of Form 8949, as long as the same information is provided on the attachment and other conditions are met.


Link to Form 8949:

https://www.irs.gov/pub/irs-pdf/f8949.pdf


Link to Form 8949 Instructions:

https://www.irs.gov/pub/irs-pdf/i8949.pdf

Schedule C

If you mine cryptocurrencies, you will likely need to complete a Schedule C, which calculates your net profit or loss from business. If you bought large equipment for your mining business in 2017, you will also need to complete a Form 4562 to report which portion you are expensing currently.


Link to Schedule C:

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf


Link to Schedule C Instructions:

https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

Form 4562

Complete Form 4562 iff you bought large equipment for your cryptocurrency mining business in 2017.


Link to Form 4562:

https://www.irs.gov/pub/irs-pdf/f4562.pdf


Link to Form 4562 Instructions:

https://www.irs.gov/pub/irs-pdf/i4562.pdf

Current IRS Cryptocurrency Guidance

IRS Notice 2014-21

IRS Virtual Currency Guidance : 


Virtual Currency Is Treated as Property for U.S. Federal Tax Purposes; 

General Rules for Property Transactions Apply


IRS on Cryptocurrency Tax:


https://www.irs.gov/pub/irs-drop/n-14-21.pdf


News Release IR-2014-36, March. 25, 2014


https://www.irs.gov/newsroom/irs-virtual-currency-guidance


Link to Proposed Tax Bill to Exempt Crypto Transactions <$600