If you want to know your gains or losses, you need to know your basis. It’s really just as simple as finding the original purchase price of your coin in FIAT + acquisition costs. For example, did you buy one Bitcoin at $14,000 + pay $290 in fees? Your basis is $14,290.
When you’re calculating a large number of coins, things can get…well, more than a little hairy. Even more so, if you’re buying goods/services or converting to other types of coins, the methodology can make your head spin.
The IRS doesn’t care if it’s difficult for you, you’re the one responsible for proving basis—which means detailed record keeping because incredibly important. That’s where BitTaxer becomes incredibly helpful, as it integrates with your chosen exchange and pulls your transaction information directly into the software.
This post originally appeared on the BitTaxer Crypto Tax Blog.