This is for the Coinbase service, but, can provide some context and helpful guidance.
(Disclosure: This is a link to support DCtv & The Pub if you decide to sign-up.)
Do taxes apply to virtual currency gains?
Yes. Although Coinbase cannot provide legal or tax advice, the U.S. Internal Revenue Service has released guidelines for how to report and pay taxes relating to digital currency activity. You can read them on the official IRS.gov website here: http://www.irs.gov/pub/irs-drop/n-14-21.pdf.
We remind all our customers, both US and international, that you have a responsibility to self-report and pay taxes on all taxable gains. Please consult with your accountant or tax advisor to ensure that you file and pay taxes correctly.
Will Coinbase send me a 1099 or similar form?
For U.S. users only, Coinbase provides Forms 1099-K to certain business users and GDAX users that have received at least $20,000 cash for sales of cryptocurrency related to at least 200 transactions in a calendar year.
Does Coinbase provide other tax reporting information?
You should refer to your account transaction history for records to compute your gains and losses over a given period. As a convenience to our customers, Coinbase also provides a Cost Basis for Taxes report (in beta) which will help with filing your taxes.
This report provides a summary of your digital currency purchases and sales, showing your cost basis and capital gain/loss.
We use a FIFO (first in first out) method for this report. Transactions sending into or out of your Coinbase wallet are treated as buys or sells at the current market price in this report. However, you should keep your own records for best results and update the report accordingly. For example, if you transfer funds offsite to a desktop wallet, and then back again, you would not count this as a sale of digital currency.
You can generate the report here, by clicking on “New Report” in the upper right hand corner.
Note that if you have any deleted digital currency wallets within your Coinbase account, they will not appear in the report generation tool. To restore them, navigate to your accounts page, select “Show Deleted” at the bottom, and then un-delete the wallet you’d like to run a report on.
Our cost basis tool is in beta mode and we do not guarantee the accuracy of gain/loss calculation provided. You should always refer to your account transaction records for the details of all trades. We expect the cost basis tool to be released in final version in January 2018.
Disclaimer: This report does not constitute legal or tax advice. Tax laws and regulations change frequently, and their application can vary widely based on the specific facts and circumstances involved. You are responsible for consulting with your own professional tax advisors concerning specific tax circumstances for your business. Coinbase disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns.
When you request a form it’ll show up in your email inbox like so: