I have been day trading cryptocurrencies for the past few years and I have made a LOT of money doing this. Because of the nature of day trading, I have made thousands and thousands of orders across dozens of different exchanges and accounts. This has resulted in me making a massive amount more than I would have if I just followed the HODL principles that lots of people seem to blindly follow. I’ve made a lot of money and I understand that the good ol’ U.S. of A. wants to get a fair share of my hard earn profits. This is no different than if I was trading stocks or anything else and I’m more than happy to pay them.
The problem is that the IRS demands that EVERY SINGLE TRANSACTION is to be recorded. And the IRS also expects that every single one of my thousands upon thousands of trades must have an attached USD value (when none of them actually have any because it is done in coin pairs). I mean what is the point in calculating a ETH to BTC trade in USD? What is the point in recording the transactions when I trade them back and forth a second later? This isn’t even bringing up the point that the USD value or each of these cryptocurrencies fluctuates by a massive amount on a minute to minute basis. Changes of 1% or more happen from minute to minute. Changes of 10% are common within an hour. To have to try and calculate the fictional USD value of each trade when it occurs is pure nonsense. I have done so many transfers that on multiple occasions my trade history has been totally wiped out. So even if I had the time and motivation to sit down and do the work on each transaction it’s not even possible…
Finally, if the IRS thinks my calculation is incorrect or somehow off, it will be up to ME to prove otherwise, so I’ll essentially be “guilty until proven innocent”.
I’m going to a tax attorney or CPA and have them deal with it, but even then, I have a strong feeling that they will just be as clueless as me. I’m hoping to pay it off as a capital gains tax and be done with it. I’m more pissed on how much headache I have to go through to report this than the ACTUAL money I am giving up…