Now that the U.S. government will receive the information from thousands of users of Coinbase to determine the taxes that investors must pay for their cryptocurrency profits, the platform is giving its users a tool to help them calculate their tax requirements.
The new tool launched by Coinbase is a gain/loss calculator of the users' investments, in order to comply with the tax rules of the U.S. government.
As explained by the platform on their blog, the calculator can be used to generate a report that describes the capital gains or losses, using a first-in-first-out (FIFO) accounting method.
This accounting method is very simple: the earliest goods purchased are the first ones removed from the inventory.
However, the tool only works for the purchases that have been made within the Coinbase platform and is useful only for those who report their taxes in the United States. Those who bought cryptocurrencies through the Exchange outside of the U.S., don't have to pay any taxes, unless it's required in the country they live in.
Likewise, Coinbase does not recommend using its tool to those who bought digital assets on other platforms.
"This tool provides a preliminary gain/loss calculation to assist our customers, but should not be used as official tax documentation without validating the results with your tax professional," the Exchange warned.
The issue of taxation on cryptocurrencies has been a hot topic since the Internal Revenue Service (IRS) of the United States announced in 2014 that it would treat such assets as a taxable form of property rather than just a currency.
The launching of the tool has to do with the fact that a few weeks ago Coinbase was the subject of a lawsuit by the IRS, which wanted to obtain information from the customers of the Exchange in the U.S. in an effort to track potential tax evaders.
Under American law, U.S. citizens are suposed to report any type of income, whether it comes from a salary or an investment, like real estate, the stock market or, in this case, digital assets.
By Alejandro Cortés