Bitcoin mining accounting software
If you prefer not to do this process through an Excel worksheet, you can use one of the software programs to track your BTC transactions, or pay your accountant to manage it. Not the time, the date day. Since cryptocurrencies fluctuate by the second, this creates an interesting situation.
Unless you have already converted the BTC into cash, you have choices in how you want to interpret the fair market value of that day. The IRS has not yet stated whether they will require you to use a consistent method for each decision point. Reporting Options The IRS has yet to state whether you will be required to use a specific inventory method for reporting. Whichever you choose, you must stick with that accounting method. For purposes of this paper, we will assume you are using FIFO. This method assists in meeting the requirements for gains to be considered long-term instead of short-term.
The IRS can only audit back 3 years; however, there are special circumstances that can extend that time period. They can go back over every year of your adult life and audit your tax returns. Any time you purchase goods or services with a currency like Bitcoin, Dash, or Litecoin, you need to assign a proper valuation to the transaction and determine if there was a gain or a loss. NODE40 Balance makes it easy to treat your blockchain assets just like any other asset you may have in your investment portfolio.
Safely and securely upload your wallet transactions, and NODE40 Balance will analyze the blockchain to provide valuation data for every aspect of a transaction. Annotate your transactions, and modify valuations based on your real world experience. Not all transactions are taxable. View your income, gains, and losses. Just like traditional portfolio services, you can use NODE40 Balance on a regular basis to see how your assets are performing. While most jurisdictions allow you to use digital currency to purchase goods and services, when it comes time to pay your taxes, digital currency is considered property.
Transacting with property means that every purchase you make will incur a taxable gain or loss. The IRS is explicit in its treatment of digital currency as property.
Data on the blockchain may be permanent and immutable, but reporting of real world transactions requires flexibility. NODE40 Balance allows you to define how you interacted with digital currency. Not all digital currency is taxable. NODE40 Balance allows you to designate transactions as exempt from ordinary income reporting. If your transaction value differs from the daily average market valuation, you can make adjustments according to your records.
NODE40 takes security of your data very seriously and has procedures in place to ensure that your data is protected.