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Crypto Taxes With Shehan from @cointracker part deux
Recorded: Feb. 18, 2026 Duration: 0:50:00Space Recording
Short Summary
In a recent discussion, crypto enthusiasts explored the significant changes in IRS regulations regarding crypto transactions, including the introduction of Form 1099-DA and the implications for compliance. As the IRS gains visibility into crypto activities, users are urged to ensure accurate reporting to avoid audits, especially with the evolving landscape of bankruptcy cases affecting crypto assets.
Full Transcription
Music Hello again. Are you able to hear me this time?
Okay, wait. Let me invite Shihan to co-host.
Apologies for the technical difficulties.
It seems like if you get booted for half a second from spaces,
then you'll just destroy the space for some reason.
So that's cool.
But anyway, we can try this again.
So Shihan, sorry about that annoyance, but maybe you can go over what you went over again quickly.
And we can get to it again.
No worries. Technical difficulties, so we apologize.
So let me kind of highlight the key thing to you guys.
So this tax year is the first time IRS going to have scalable visibility
into what you are doing inside the exchanges.
So basically if you cashed out any
crypto or swap crypto inside a centralized exchange, the exchange is going to send you a
form 1099-DA to you. It's a brand new form. One copy is going to go to you, one copy is going to
go to the IRS showing your activity. And if you don't report that activity on your taxes, it's very likely IRA is going to catch you through their computer system.
And so that's something you need to be aware of.
Just kind of double-clicking on the form.
This form is going to be incomplete in the first year.
So if you sell something, you're only going to have proceeds, not the cost basis.
So you still have to use a crypto tax software tool to figure out your full gain or loss. And these forms are not being issued by DeFi platforms. And in those
cases, you have to still compute your gains and losses. So a lot of things are happening. Again,
the TLDR is that for the first time, IRS is going to have visibility into what you're doing inside
exchanges. And if you don't report that activity, you will most likely get audited.
So this is the time to be compliant.
So yeah, so that's what's changing this year.
Okay, and so I have not gotten my 1099 DA yet, but could you go over basically what it
will look like? It sounds like this year
it will just have your sales and the like no cost basis information at all, or will it,
will some exchanges try to put cost basis information or what do you expect those to
look like? Yeah, the form 1099DA looks very similar to what you would get from like a stock broker.
So it's for the 2025 year, exchanges are only required to report your proceeds, not the cost basis.
So it's your responsibility to figure out the cost basis and put it on the form 849,
because if you don't do that you will overpay taxes.
Now that said, I think Coinbase is issuing some form 1099-DAs with cost basis if they have that information. So if that's the case, you're in a better spot so you don't have to do a lot of
math or anything like that. But for most of the people you're going to get a Form 1099-DA with just the proceeds
and you will have to figure out
the cost basis on your own.
I see.
And do you know,
in terms of like when the cost basis is shown,
would that only be if you purchased
the coins through Coinbase,
not if you've sent coins to Coinbase
because they wouldn't know
technically what the cost basis is and they
wouldn't try to guess like at the time.
Correct.
That's generally the case.
You know, if you're like a simple user, if you're just using one exchange, specifically
Coinbase, and if they have that information in their internal database, they're gonna,
you can see that information on the DA that you receive.
I see. And do you know, for upcoming years, you said this year, or at least for 2025,
we expect the cost basis to not, or it's not required. So if they don't have it,
they wouldn't have it. But 2026, is it required then? And do you have any idea how they're going to get that information?
Yeah, so for the 2026 tax year, the cost basis is required,
but it's only for assets purchased in an exchange after January 1st, 2026.
And that asset has to be inside the exchange for it to be shown on the form 1099DA.
For example, let's say like today we are in 2026, I bought like a Bitcoin on Coinbase,
then I transferred it out to my self-custody and transferred it back to Coinbase.
Coinbase is not going to have any cost basis. So Coinbase is only going to report the cost basis for assets that you purchase after January 1st, 226,
and the assets that never leave their platform.
I see. Okay.
So basically, it's still very important to either use tax software or have amazing records of your own for all your transactions because the cost basis
is not going to be on these forms but the sales are going to be on these forms so the IRS will
know if you've sold crypto using an exchange and will be confused if you don't report it
enough to either audit you or at least send you like whatever they normally send of like, hey, this doesn't match up.
Yeah, actually, IRS has like a like automated system to do this.
It's not like, you know, your return is being reviewed by like a human.
Basically, when you file your form 8949, their system scans whether that 8949 has the proceeds amount reported to the IRS by the broker.
And if there's a big mismatch, IRS computer system is going to send you an automatic notice. So
that's why specifically this year, it's very, very important that you wait until you receive
the 1099 DA. I know it can be frustrating, but you got to wait because otherwise you don't
know what the IRS has. So you wait for the DA and then you make sure your Form 8949 matches the DA
or it's above what the DA reports for reasons we can talk about later. So you got to make sure
you do those two steps before filing. Otherwise, it's very likely that you're going to get a tax notice. And that comes in a lot of headache and pain.
Yeah, that makes sense. I think it's very similar to if you sell, I think you mentioned stocks
before, I think you get something like that you sell stocks, or if you buy stuff from your company,
like you buy, what is it called, the stock options from your company
and sell those. Or if there's 1099s, like other 1099s that you get because you didn't work for
somebody that you don't match up. I think those are all in similar, like automated, you'll get
something and you have to prove to somebody at that point that you for some reason didn't put
it on for some reason or that you actually owe some money and I think you probably get a fine
with that too right yeah one distinction between stocks and crypto is that for stocks like almost
all of your basis is kind of reported by the broker because you cannot like self custody your stocks.
It's always. So if you receive like a stock form, like I barely see any missing cost basis.
So you're in good shape. So that's something to note.
To answer your question about the penalties, basically, if there's like a big mismatch, you're going to get this automated letter called like CP2000.
It basically kind of shows, hey, here's what you reported.
Here's what we received from the broker.
And here's the difference.
Explain to us, you know, what's going on.
And obviously, if you receive a letter like that, you will have to use a CPA.
I mean, that's the recommended route to kind of handle those letters.
Again, the point is you have to do everything in your control to not get that letter.
Because if you get that letter, there's headache.
You've got to pay like a CPA.
It's a hassle.
Yeah, that makes sense.
And then not only is it a hassle, but if you were wrong, then you're going to owe whatever the tax was, you're going to owe some type of difference that you were supposed to have paid. Usually there's some interest or whatever.
Basically, you don't want to get on the radar of the IRS.
You want to be compliant.
You want to do the right things.
And then you shouldn't necessarily have to worry about these type of things.
And I think this year, because of the 1099 DAs, we have a very strong point of at least get these right.
At least get these things that the government knows about exactly correct.
Otherwise, you're going to be automatically through a computer flag. And that's like,
something you really, really don't want, right?
Right. And another thing that I kind of keep seeing this particular tax season is that
a lot of people are in a rush to file their taxes, hopefully to get their tax refund.
People are in a rush to file their taxes, hopefully to get their tax refund.
And I've seen some places where people are like, oh, I'm going to file before I receive
my 10-9 NDA.
That's something I would not encourage you to do, because if you do that, it's very,
very likely that you're going to report something that does not match with the 10-9 NDA. So I would highly encourage you to kind of wait
until you receive the 10-9 NDA, look at it, and then complete your tax filings. I wouldn't do it
before that for the reasons that we discussed. Yeah, I think that's a very good idea. That's like
deciding to file before you get W-2s. You're like, I think I know exactly how much I've made.
I'll just wing it.
Yeah, exactly.
Check my bank balances.
Right.
Yeah.
And as we were saying, or as I was trying to say earlier,
except I think my microphone or spaces wasn't working properly,
but Coinbase has delayed a lot of 1099 DAs, including mine, until the max date is March 17th.
So that gives a month between when I would get those and when my accountant will look at them and put them in his queue to do with all the other people who are taking forever to get all their stuff in.
So that is not a great time for anybody, but there are options, right?
If you're getting things late, you can still request to delay sending in your taxes, right?
Correct.
The good news is that I think my latest understanding is that Coinbase has rolled out 1099-DS to almost all the users,
even though obviously they technically have time until March.
But almost all the users have been issued DS so far, which is a good sign.
But for some reason, obviously if you want to extend filing your taxes for whatever reason,
you can do that as well. And if you file for an extension, you get until October 15 to extend filing your taxes for whatever reason, you can do that as well.
And if you file for an extension, you get until October 15 to file your taxes.
Okay, yeah.
So I think another thing I've heard often about taxes is if you file them on time or with the extension, you do everything right. The audit window is about three years.
So with crypto, like I always feel paranoid
because I think I've done everything right,
but because crypto is so weird
and cost basis are all over the place
in terms of like, you know,
you get things when you get them
and you have to calculate the price
exactly when you get them.
And it's a little bit of a YOLO
feeling even when you send it in doing your due diligence. So if you've had your if you sent in
your taxes on time you haven't committed any fraud then in three years they're not going to send you
any audit letters but if you don't file your taxes then I think they have like infinite time to audit you right?
That's right. The point is that filing something is better than filing nothing. I know like there's like a lot of conversations especially these days about you know protesting you know not paying tax
bills and etc. But by the way which I understand I mean, you know, it's a separate issue.
But the reality is that for the 2025 tax year, you have already paid your taxes.
And the only way to get your taxes back is by filing.
So I would encourage everybody to file their taxes.
Obviously, if you have a refund, you're going to get that.
And if you have like losses, those losses going to get that. And if you have losses,
those losses can work for you to increase your refund. And if you don't file those losses,
you're not going to get the benefit out of that. So yeah, if you file something correctly,
IRS can only come up to you for the next three years. After that, they cannot. That's called statute of limitations. And obviously if you
underreported something by more than 25%, IRS can come after you for the six
years. And as Billy said, if you don't find anything because of some of the
things that you're seeing on social media, IRS can come after you forever and
assess penalties for all the back taxes and etc. So
not a good place to be in. Yeah, I remember I had a friend who just decided he wasn't going to pay
taxes because or no, no, he was going to say he had like nine or 10 exemptions or something like
that, because it reduced his taxes, and he wanted more money.
And then the IRS gave him a giant bill.
And he was like, yeah, you can't get rid of these.
They just keep coming after you.
It's like, yeah, don't do that.
You should pay the right amount that you're supposed to pay or the IRS is not going to just randomly be like, ah, it's fine.
Don't worry about it.
Just defraud us.
We don't care.
So, yeah, I don't know. People get strange
ideas. I understand, like you said, I understand wanting to be like, come on, this seems unfair.
The American tax system is ridiculous in many different ways or very complicated, but that
doesn't mean you shouldn't do your best job to try to do the right thing and pay your taxes and pay them the correct way.
So if anyone has questions, please feel free to request and we'll answer them. But
in the interim, I can talk about some of my experiences and why crypto taxes is a very important thing to me.
And, Chian, you can pipe in for my mistakes when I did all this stuff and what you might recommend for these type of cases.
So back in, I think it was 2021, when everything went crazy
and the world was still insane, the markets were going nuts,
I sold a lot of things and received Ethereum
for my sales. And that was under the assumption that you could sell, or when you sold the Ethereum
is when you would be taxed on the Ethereum. So Ethereum, I think, was at like 4,000 at the time.
And then at the end of the year, and then at the beginning of the next year,
it went down to like $900 or something like that.
So I acquired a bunch of Ethereum at $4,000.
And then at the time it was like $900.
And I'm like, oh, it's fine.
I don't need to pay taxes on this yet.
But I got an accountant and my accountant was like,
yeah, you're dumb. You have to pay taxes on this yet. But I got an accountant and my accountant was like, yeah, you're dumb.
You have to pay taxes on the amount that the Ethereum was worth at the time that you acquired
it. And so my tax bill was more than the cash I had, plus what my Ethereum was worth. So I would owe more in taxes than I could pay, essentially because of our wonderful tax
system. So, Shihan, what kind of strategy would you recommend for if you sell something for
crypto? Yeah, this is a tough one because we're dealing with very volatile assets.
Yeah, this is a tough one because we're dealing with very volatile assets.
My recommendation is if you, you know, swap crypto and when you swap, like if you keep making money, just convert like as a rule of thumb, 20 to 25 percent into cash or like a stable coin.
By the way, make sure the stable coin doesn't crash either because it could happen.
Luna or whatever that was called back in that day. Right. or like a stable coin. By the way, make sure the stable coin doesn't crash either because it could happen.
Luna or whatever that was called back in that day. Right.
So make sure you have at least 20 to 25% allocated
in something that doesn't crash, that stable.
That's a good rule of thumb so you won't get into trouble.
Yeah, I think what I did in every year after that year was when I get crypto, I do not
care what the price is, I immediately sell all of it.
And then I stash, because I live in California, it's not just 20-25%, that won't be safe.
So I actually stash 50% in a bank account that I consider like don't like this is not my
money I don't even touch it and then I send that beat split between the feds
and California at the end of the year or actually you have to do it not just at
the end of the day you have to do it quarterly if you're selling stuff for
crypto so it's just stuff that you need to remember to do.
When you get money from crypto, like in my head,
when you get a paycheck, you get the taxes,
the company takes out the stuff for you.
But if you sell something for crypto,
you don't get any of that stuff.
So you just have to do it yourself.
So you have to take whatever you think you got.
You sold your monkey NFT for 12 Ethereum or whatever.
Six of that belongs to the feds.
Just take that out of your brain.
You didn't make 12, you made six.
And that'll make it a lot less terrible at the end of the year
or whenever you find out that you need to pay ridiculous amounts to the government, even if you don't have it because
the money doesn't actually exist yet.
So that's just how it works.
And it's awesome.
And that's why I like to talk about it and love taxes so much.
Yeah, just to add to that point, it's safer to allocate more money and even pay more money
to the IRS because if you paid them extra, you can get that money as a refund.
So I would just be on the conservative side and just allocate a little bit extra money
than necessary because you just don't know your exact tax bill until the end of the year.
Yeah.
And then just to totally not complain more about how bad our tax system is and how stupid California is as a state in every single way possible.
But California, when you pay your...
So if you earn money in cryptocurrency throughout the year, you should pay a certain amount as estimated taxes per quarter.
But California doesn't want you to pay what you got for that quarter.
It wants you to pay 70% or what you think you're going to earn throughout the year by half of the year.
So you will earn, let's say you earn $50,000 in half of the year. So you will earn, let's say you earn 50,000 in half of the year,
it wants you to pay 70% of that 50% of the 13% or whatever California taxes are by the second,
end of the second quarter. And then if you make a bunch more money at the end of the year,
you will get penalized because they're like, oh, hey, you didn't actually pay 70 or you didn't pay the whole 70 percent in the beginning of the year.
So here's an extra bunch of money for the tax bill because you aren't a genie who knows the future or whatever.
So I hate California. Everything about this state is the worst and it should not exist.
But that's beside the point. Taxes are annoying and just be conservative and
just know the rules. So when you get to those points, you're slightly less angry.
Yeah. Yeah, it doesn't look like we have any questions quite yet. So I know one of the things that has happened a lot this year to people is they have,
like, there's these platforms that they can name somebody or name like an account
on Twitter, or they can name an account like by their wallet to give certain fractions of the trades that have been made on a particular coin.
I think they're just called creator rewards.
And then you can accept those creator rewards at some point.
So I'm wondering if you know what the tax law is for if those rewards are available,
but you haven't accepted them, at what point do you need to pay the taxes of whatever the token was worth at the time?
Is it at the moment of accepting or is it the moment that you can actually get to it, even if you didn't know about it, or what your interpretation of that law might be?
Yeah, so it's a little bit of a gray area
the tax code has some general concepts and principles we can follow so in this case
my recommendation is that you have a taxable event at the time you can exercise dominion and control
at the time you can exercise dominion and control in simple terms,
at the time you have the ability to accept the money.
That's when you gain access to wealth.
Again, that's how the tax code kind of defines whether you have a taxable event or not.
So whenever you have the ability to accept those tokens, that's when you have the taxable event or not. So whenever you have the ability to accept those tokens,
that's when you have the income recognition event.
I see. So basically, if somebody on some platform gave your account
the ability to accept the tokens, but you don't know about it yet,
and then you learn about it three months from now,
and you accept the tokens then, because you have the ability three months ago the IRS expects you to
give or pay for the value that it was three months ago?
I know it's a little bit counterintuitive and may not be practical but if you strictly read like how
the IRS thinks about income recognition events,
again, you have to understand that the IRS code has not been updated for multiple decades, right?
Yeah, whoever wrote it wasn't thinking about this specific scenario probably.
Right. And by the way, this same scenario applies to airdrops and hard forks as well,
because there are two events right because there's an
event that you actually get the token but you may or may not know about it and their second event
you actually get to know about the event so conservatively speaking it's the it's it's when
you have the ability to claim the tokens uh it's it's not at the time you claim the token because if that's the case
that will open up for like exploitation right because then i can wait along maybe i can claim
the token next year when my tax liability is low i can claim the token when the value is so low so
that's the reason why you have that income event when you have the ability to claim it.
That way it's like more fair and square versus objective manipulation.
I feel like I understand the idea behind it, but in terms of crypto, it's like any of these platforms could just explode any second.
So I personally don't think it's my money until it's in my wallet and I can actually move it and control it rather than like on some random shady access that on February 19th and you only did it on February 21st.
And the price was $2,600 on February 21st and $2,400.
So you actually owe 200 extra dollars of taxes.
And it's just like, I don't know how unreasonable or whatever this, or if it's like AI in the future,
or what is going on with this stuff.
So I'm always personally just really paranoid about this stuff,
which is, I guess, why it's better just to use these tools,
or at least in my experience, if I use these tax tools, like CoinTracker,
I can just put all the information in and then it's like, the tool says this, you can argue with it, but your tool has to be better than this tool that's made for this kind of stuff.
So I don't know.
Yeah.
So from the interactions we have had with the IRS, they're friendlier than a lot of people think.
path with the IRS. They're friendlier than a lot of people think. And right now, their main goal
is to get people who don't file anything to file first versus going after, like in your example,
like, oh, I just reported $200 less. I mean, at least those people are reporting something,
right? So,
their focus is on getting those non-compliant people compliant first. And then after that,
it's possible that they're going to come after people with like discrepancies, timing issues,
and et cetera. But it's going to take a while because right now, again, the biggest problem
they have is a lot of people, according to their estimates, like 75% of the people are non-compliant.
So their main focus is how do we get them to file something?
I see. And by non-compliant, you mean if they have crypto sales, they just don't report it at all?
Correct. Nothing at all.
I see. Okay. So those are the people that are, that's what this, or that's what we believe this law is intended to convey, not to try to nickel and dime somebody who is off by a few days and when they could potentially get an airdrop.
and how is the IRS going to know, how is anyone going to know type thing, right?
But they know if you have an exchange and you sell for actual money,
they have that information now and that's the kind of stuff that they're trying to grab, right?
That's right. So just going for those non-compliant people.
But that said, that is not giving you a reason to misreport things, especially if your numbers are huge, like in the millions.
Because in those cases, it's worth the IRS's time and effort to audit you because if there's a million dollars in unpaid taxes, there's ROI.
So yeah, I'll leave it there.
That's fair enough. And I do remember reading a story where they did go after somebody in
crypto or they reported their taxes, but they reported it very oddly. Are you familiar with
the story? Do you remember what the story was?
Is it the one Austin case? The guy was in Austin?
It might have been. I just remember when he sold Bitcoin, he said the cost basis was like
more than Bitcoin was worth. So he was like, you know, I got this Bitcoin at $180,000 and I sold
it at $120,000. So I actually sold it for a loss type thing.
Right, right.
Actually, I covered that story.
I actually tweeted about it.
Okay, yeah.
I would love to hear more information.
Because I don't remember if I was wrong or not,
but I would love to hear more information about that story.
Yeah, I don't remember the specific information.
But like you said, he filed something, but he misreported the cost basis. So
he inflated the cost basis. And those were big numbers, I think in the millions, he was indicted.
I believe now he's in the jail. That kind of goes back to our point. You know, if the numbers are
big, Iris will come after you because there's ROI for them.
Right.
Yeah.
So basically, if you have big numbers, it's probably best not to lie and not to say your cost basis is infinity or a value.
Like every Bitcoin you've ever gotten is at the all-time high magically.
And then you will sell them for
whatever price that you sell them for. Yeah, I think that makes sense. In general too,
so a lot of people, I think you had a post earlier today where somebody had Bitcoin maybe
10 years ago and is desperately trying to figure out what the cost basis is.
When you have crypto that you've received or like a really old wallet or whatever and the cost basis is, you know, who knows, you mined it or whatever, like this is potentially negligible.
What does the IRS expect to see or what might raise flags for them?
Yeah, first of all, I mean, if you got into crypto 10 years ago,
congrats, I mean, you're in a really good spot.
Basically, so maybe it's worth kind of clarifying a few things.
A lot of people think that when you file taxes
and when you report the cost basis,
especially for like
these like old coins, that you had to literally like prove to the IRS how much you paid for
that coin. And that's not the case. You just report, you know, the right information on
Form 8949, obviously have the records, and you will only have to prove that information
to the IRS only if you get audited.
And hopefully if you file everything correctly without raising any red flags, you're not going to get audited.
So you're fine. So yeah, if you have the, and the other thing is for those 10 plus year old coins,
you might not have the records to figure out the cost basis. In those cases, you could consider using a tool like CoinTracker and just connect the wallet to a public address.
And then we can trace back the very first transaction happening inside that wallet,
figure out what you did, figure out the fair market value, figure out the cost basis and generate the right tax reports for you.
Got it. Yeah, that makes sense for like any old wallets or any, I don't know, basically, if you're going to sell something on a public exchange at this point, you probably want to
trace it and figure out what the cost basis was. So when that information, it's like both you send
the correct information to the government
and also you just have that just in case, right?
Even though we wouldn't expect to get audited unless it was like something insane.
And kind of like you said, you know, if you actually had crypto for 10 years stored away somehow,
it might actually be a pretty large value.
So it's probably important to get that right.
Correct.
It looked like we had somebody who wanted to speak but they disappeared.
Let me check if there's any questions in the spaces. Okay, somebody asked,
Questions in the spaces.
Okay.
Somebody asked, what should we do in the case where we receive some crypto back from one of the bankrupt companies like FTX, Celsius, BlockFi, etc.?
Yeah, I see this question a lot on Reddit NX.
I had to give my typical CPA answer.
It depends.
And I'll tell you why. If you read these bankruptcy documents, there are different classes of creditors and debtors. And I don't know which
class you belong to, for example, to give you the right answer. So that's one complication.
The second complication is that at the time the exchange went bankrupt, you had, let's say, ABC coins, but now you're getting repaid from ABC or different type of coins.
So in those cases, you had to do some complex calculations to figure out if there's a gain or loss and etc.
to figure out if there's a gain or loss and et cetera.
So it's a very complicated one, unfortunately.
I would highly, highly recommend you to work with like a CPA
to figure this out because you need to read these bankruptcy documents.
You need to figure out how you're receiving these repayments.
You got to track fair market value, basis, and a lot of things
to get to the right outcome.
Unfortunately, in this particular case, it's very, very hard for you to just rely on a crypto tax software
because this is like an edge case of an edge case.
I don't think any tax software is able to do this right
because there's a lot of facts and circumstances-based decisions you need to make with a qualified CPA.
Yeah, I think in the, is it FTX where they're just sending cash, right, of some value at some
certain time rather than giving you your crypto back, essentially? I think that's what can happen
in a lot of these cases. Yeah, but in the case, you're right, I think in the case of Celsius, I think people got
paid through cash, tables, crypto, and even like stocks from like a mining company.
Oh, right.
That would be so annoying.
I would not want to get yet another annoying thing instead of getting, I would just want
to get cash and get it over with.
Right. So, yeah, so it could get complicated.
Every bankrupt is a different thing.
So it's hard to give like a flame vanillance, unfortunately.
Yeah, that's lovely.
So not only do you get screwed by the bankruptcy, but you get some complicated accounting for
having to do taxes later because it's all annoying uh that's cool yeah
on that point i think in some bankruptcy cases uh i think they finalized the document at a certain
point let's say like a couple of years ago so now you're receiving let's say Bitcoin at that finalized value three years.
So there could be discrepancies, right?
Because like, I mean, if you were to, you know, held that coin longer, like, you know,
you're getting more of the coin.
So I don't think anybody is like very happy with how these bankruptcies went on.
The good news is that at least you're getting something back,
but that something may not necessarily be great,
but at least something is better than nothing.
Yeah, the most curious one is for me, the Mountain Gox.
I don't know if you were in crypto at that time.
Yeah, I was around.
Oh, wonderful.
I think it was in 2012 or 2013, like way back when.
So the amount of crypto people would have in those, I think it was mostly Bitcoin,
you would have like 28 Bitcoin in that exchange, which was worth, you know, like 250 bucks at the time or $2,500 at the time or something.
And I don't know what people might be getting back. Or I heard
like earlier last year that people were starting to get some back. But I don't know if that actually
happened or what even happened with that. I also heard that. I don't know. I mean, I haven't
personally encountered anybody who received it. But because like it happened like 10 years ago,
But because it happened like 10 years ago, and assuming they received it in their original Bitcoin, I mean, I think in that particular case, if you receive even a portion of the Bitcoins that you had, you should be in good shape.
Yeah, I feel like the people that lost Bitcoin who were really upset back then would have lost like, you know, 50, 100 Bitcoins.
So even if you get like three, it's like, oh, sweet.
It's like 180K or whatever.
And honestly, maybe like they wouldn't have kept the Bitcoin that long if the exchange was active.
They probably would have sold.
So it's more like a forced saving type oh yeah this is true because i always do the stupid person math where i think of
the price like i think of how much i could have gotten if i sold at the exact right time basically
so it's like okay yeah like if i held this for this long and then i sold when it was all-time
high i would have made like $8 million.
And it's like, that is not realistic.
That is not what you would have done.
I would have, you know, I sold my Doge famously in 2015,
but I would have sold it when it was a penny because that would have been insane.
I'd be like, oh my God, Dogecoin is a penny?
And I would have gotten like, I don't know, you know, 50k instead of 10k or whatever
that I ended up getting. So it's like, this is very unrealistic to think that you would
have held it. So maybe, maybe those people, you know, I just hope everybody who got scammed
and screwed, like gets something that they're mildly happy with. And the biggest problem
is just the taxes rather than anything else.
the taxes rather than anything else.
Yeah, we still don't have anyone.
So again, if you have any questions for Shihan,
would you consider yourself a former CPA
or are you still a CPA or how does that work?
I am still a CPA.
Are you a non-practicing CPA?
Correct. I don't practice as in like I don't I don't do tax
filings but I use my knowledge to build tools like practice or technically I'm practicing but
it's it's a little bit of different type of practicing got that makes sense uh yeah I'm a
former software developer I guess but still software. I still make software.
I still do things with software.
I just am not at a company.
I'm at my own company doing that.
It looks like we got somebody who has a question.
Kenny?
Yeah, can you guys hear me?
Yeah, we can hear you.
Yeah, thanks for having this open.
I guess maybe this might be a dumb question,
but I guess probably like lots of other people, yeah thanks for having this open i guess maybe this might be a dumb question but uh
i guess probably like lots of other people i'm finding myself very stressed out about
taxes uh crypto taxes um i use coin tracker and coinbase i got my 1099 da i guess
i just uh maybe some of the low-hanging fruit of like the critical things that I need to make sure are correct.
I was looking at some of your posts, Shein, you know, and I think you said making sure that the what is it?
The the eight nine four nine matches the 1099 D.A. D.A.
Or yeah, so I guess if you could just humor me it's maybe a dumb question but i would
appreciate it no it's not a dumb question actually it's uh it's a very relevant and timely question
um so i guess my message to you and everybody is that if you get a 10 9 DA, just upload it to Cointracker and we will compare your 8949 numbers with
the 1099DAs and adjust things if necessary.
Obviously, we will kind of walk you through everything.
You can kind of pick your stuff.
So if you're using Cointracker, I wouldn't worry too much about it as long as you ingest
the 1099DA.
I cannot say the same about the other crypto tax tools.
Unfortunately, most of them are not ingesting 1099DAs. As a result, their number is going to
be different than 1099DAs and that could likely result in IRS notices as we discussed earlier.
as we discussed earlier yeah that makes total sense uh when i was uploading it to coin tracker
it it basically it didn't recognize it it says that it uses ai to look through it it says it
it didn't look like a real document or something so i manually entered it off of my 1099 da or da
from coinbase so hopefully that's good.
It ended up, everything says it's good.
I think it's like $100 difference.
I don't know if that's a huge deal.
I was definitely stressing about it last night.
So I'll probably look at it again and just verify.
But appreciate the answer.
Yeah, no worries.
Let us know any feedback, obviously.
$100, just based on what you're telling me, doesn't seem like a big deal.
But I'm sure like you kind of went through the flow and you picked the right path.
And for each path, like we also kind of flagged, hey, this path is fast, but it's
going to increase your audit risk.
However, this path could be a little bit slower, but it minimizes your audit risk.
So you have a lot of optionality with this new flow.
So hopefully you can file your taxes accurately.
Thanks, Kenny.
And we have someone else that came up.
Stone, you had a question?
Hey, actually, I don't have a question.
I just met Garrett outside ETH Denver, this conference here.
Interrupted their lunch because I recognize the color.
Shout out to Cointracker.
So we connected in Telegram.
I'm going to have you guys, hopefully have you guys on to my show.
I do a show Monday through Friday here on X Coffee and Crypto with Stone.
So just wanted to put my hand up, say hello.
Love the fact that you guys are out here providing this information for free.
And your team here representing ETH Denver are absolutely professionals.
And I appreciate the introduction.
Cool yeah I think it's I'm glad CoinTracker exists for myself too because before CoinTracker
and when all this when I had to do all these taxes it was just really intimidating especially
because my wallet had like thousands of transactions the first year and I was just really intimidating, especially because my wallet had thousands of transactions the first year.
And I was just like, oh my gosh, how am I going to do all this?
So it was nice that a tool existed that I could just kind of be like, hey, look at my wallet and give me the cost basis, please.
Instead of me having to do all of this stuff at once.
So I do really appreciate the product and that's why i uh i've partnered with them for
the last few years um yeah i it's really nice just to see the the faces behind the the logo
you know and then the interactions i just had uh great group of professionals and i was even
interrupting them and they still stood up very uh anyway can't say enough nice things I'm actually jumping into a taxi
now so I gotta go but it was nice to meet you guys well when you're in the
taxi to tell them if you have crypto issues and you have to do taxes then use
Cointrecker I guess because drivers, they love that stuff.
Oh, yeah. I got your back. No problem.
Thanks, guys.
Yeah. All right. Let's see.
All right. No one else up.
So, Shion, if you had any, like, kind of final things that you might want to reiterate,
since we had some people joining in a little later,
for, like, if you had to have a takeaway from doing your crypto taxes this year, what's
kind of like the most important thing? Yeah, the most important thing is that
if you traded crypto in a centralized exchange last year, Oh.
So I'm not sure who got rugged this time, if it was me, because last time this happened, it was me.
Give me a thumbs up if you can hear me.
I'm not sure anyone can hear anybody.
Okay. Maybe I'm just talking to myself.
Okay. I see a thumbs up, so it looks like we can hear me.
So I guess Shihan, his internet died or we got rugged by Twitter spaces.
But I'm assuming, and I'll fill in for what I think he would probably say,
is the most important thing is if you have sold crypto this year through an exchange,
then make sure to match the result that you get from the 1099DA with your,
I think it was Form 8-9-49 or something like that.
Whatever the form is that you send to the IRS,
just make sure those match.
And if you do, your audit risk will be a lot less
because you won't get an automated thing
about how you didn't properly file your taxes
and you don't want that.
And then the other thing is you can use...
Oh, okay. So Shia's back. I don't think he heard me, but hopefully I did an okay job of explaining that. Sian, I said, I think what you meant or what you were going to say is to make sure that your 1099 DA information matches what you send to the IRS.
matches what you send to the IRS.
Correct. You captured it.
Correct, you captured it.
But you can go ahead and say it in the actual CPA words.
Yeah, so yeah, download the form 1099DA from Exchange.
You really, really need it this year to file your taxes.
Once you download it, upload it to Cointracker.
Cointracker makes sure your numbers match the 1099 DA to file and because
if your numbers don't match, you're going to get like an IRS notice. So yeah, so download the DA,
use Cointracker to file your taxes and if you do those two things, you should be good to go.
Yeah, that's probably the easiest way to do it and to make sure that it's done right is to upload it to Cointracker and make sure everything matches.
It sounds like there's like a wizard tool or something that will help you as soon as you upload it.
That's right.
Cool. Well, thank you, everybody, for joining.
And thank you to Cointracker for providing this information to everybody.
This is a recorded spaces, even though we had some technical difficulties.
If you want to come back and listen to it, if you missed some of the beginning,
we kind of go over some of the 1099DA stuff and some different situations that you might run into when filing your taxes this year.
But that's all the time we got.
So thanks everyone for coming to the spaces.
Bye.
