Hobbyist in Hell: Tracking My Crypto Assets for the Taxman

As a hobbyist investor, my first foray into cryptocurrency was with Coinbase.

Still, I was a hobbyist; I was new to the space and just tinkering with small amounts of these coins, learning, curious to see how this digital, decentralized economy operated and how the underlying technologies all worked.

The moment I moved a single coin out of Coinbase, the exchange no longer had an accurate reporting of my holdings and transactions so its tax report.

My own spreadsheet was getting unwieldy, as I started to integrate Google Apps scripts to look up exchange prices from the different exchange accounts I had, plus match-up cost bases for wallet-to-wallet transfers.

The most popular tool was a mobile app that operated like a stock ticker app: it would show you the prices of coins daily and, if you wanted, allowed you to manually add these coins into a portfolio, one at a time.

The moral of the story: make sure you keep good records of your transactions, or use exchanges which provide these records for you.

If you are using multiple exchanges and wallets, trading multiple coins, or using secure cold or local storage for your coins then there are several tools out there which can help you track your whole portfolio, your return on investment, the amount of fiat invested, and perhaps most importantly your cost basis and capital gains.

In the future, ideally the IRS will help clarify the tax rules which apply to cryptocurrency, especially around grey-area issues such as like-kind exchange, which accounting methods are acceptable for capital gains, and airdropped coins.

Until then I hope to see exchanges and brokers making easy reporting a priority so that their users are not left scrambling to figure out their tax situation.

Meantime, I recommend educating yourself about how to secure your coins, and learning about how cryptocurrencies are regulated in your jurisdiction.