Cryptocurrency has been exploding over the past year, thanks in part to the global pandemic. Coinbase, the most popular platform for buying and selling cryptocurrencies, recently revealed it has 43 million users and 90 billion in platform assets. A recent Tax Talks podcast, "The Taxation of Cryptocurrency: Part 1" tapped into the expertise of Shehan Chandrasekera, CPA, head of Tech Strategy at CoinTracker, who has been focused on crypto-taxes for the past four or five years.
Keep reading for highlights from the episode, or listen to the entire discussion.
The Challenges of Crypto Tax Preparation
The problem with crypto transactions from a tax and accounting perspective, Chandrasekera explains, is that crypto exchanges don't provide a form 1099b. So when clients use crypto exchanges, it becomes the accountant's responsibility to figure out the gains and losses. "It's virtually impossible to [figure out crypto gains and losses] manually in an Excel spreadsheet," Chandrasekera said. "It's very technical and very tedious."
A couple of years ago, CPAs didn't need to worry about the subject. But cryptocurrency taxes are shifting from a niche subject to a mainstream skill partly because of a cryptocurrency question on page 1 of IRS form 1040. And Chandrasekera predicts that cryptocurrency growth trends will continue. "I see a huge opportunity for practitioners who want to explore this new space. If you can build some type of expertise, there's a huge market opportunity being built right now. It's no longer going to be a niche subject going forward."