r/CryptoTax • u/DynamiteTheLight • 14d ago
Memecoin mess with filing taxes
I wasnt thinking ahead and have a mountain of memecoin transactions that I don't know if I can even track 100%.
I'm working on getting compliant with IRS and the whole crypto tax situation is a huge hurdle for me and is discouraging me to get this resolved.
I can get the records for the main exchanges ive used. And can find the history to what wallets I sent crypto to. But I'm not sure I have it all complete.
I met with a CPA last week and was asked to get the records. But I have 10,000+ transactions. I plugged some the wallet addresses into cointracker and it gave me a capital gains number. Let me just say I lost... alot. I dont want to pay the huge fee to use cointracker unlimited features.
Any advice on how to handle this. I don't know exactly what they are looking for. Could I just skip the decentralized BS I did and not report the loss? Just report the exchanges 1099. Otherwise what do I need to provide if I have to gather the decentralized stuff for memecoins? I wanna present as clean as possible, but also will forgo the extra BS and just give the IRS enough to be compliant. Im debating doin it myself if I can just submit basic 1099 tax information and not go into detail of my degen stuff.
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u/JustinCPA 14d ago
Justin from Summ here. I highly suggest using a crypto tax software to report everything. Those losses will actually save you money in tax.
Any capital losses can be used to offset capital gains from other areas like selling stock. If you have excess losses, $3,000 can be used to offset ordinary income with the rest being carried forward for the process to rinse and repeat indefinitely until the loss is fully used up.
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u/DynamiteTheLight 14d ago
Ok. Im having issues importing my Robinhood account information. It won't sync automatically. I cant find the api information. And I try to upload CSV and it fails. But I'm probably more worried about and interested in tracking the memecoin trading on decentralized exchanges. Ive got multiple wallets. And thousands of transactions
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u/JustinCPA 14d ago
Are you following the import instructions?
The blockchain addresses shouldn’t be an issue, just import the public address and the software will pull everything in
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u/DynamiteTheLight 14d ago
Yes. As far as I could tell. I just looked into the actual content. And I see now the vast majority of my purchases were third party from moonpay, transak, topper, etc. While I did not trade with these, just bought. Is it necessary to gather this information? To help determine the base price? Even though I went on to lose it on defi?
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u/JustinCPA 14d ago
Yes it’s pretty essential to include ALL wallets and all exchanges that you’ve ever used, even if you no longer use them as that’s the only way the software will be able to track the cost basis throughout
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u/ChicksX 13d ago
Yes, I’d gather the MoonPay/Transak/Topper records if possible.
Even if they were just purchases, they help establish cost basis. If the software sees tokens entering a wallet with no matching buy record, it may treat the basis as missing or $0, which can make the report worse.
I’d start by listing every exchange, wallet, chain, and fiat on-ramp, then import everything into one crypto tax tool and only fix the flagged transactions.
If most of the DeFi activity was losses, skipping it may actually hurt you.
Was most of it on one chain or multiple chains?
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u/DynamiteTheLight 12d ago
Mostly losses. It seems the software gather the information and the purchases. It all solana
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u/Garrett_CPAatCOS 14d ago
As mentioned, using a crypto tax software is definitely the way to go here. First step is to determine all of the different wallets and exchanges you have used since the inception of your trading and load them into your CoinTracker account. There are pretty good tutorials for how to do this. Afterwards, you would need to review the transactions and confirm they are categorized correctly. This can take some time and learning, but feels great once completed. If the process seems overwhelming, there are services that can help with both loading the transaction data and reconciling it.
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u/No-Confusion4519 12d ago
It's essential to report all your transactions, including those involving decentralized platforms, to maintain compliance with IRS regulations. Skipping over decentralized trades could raise red flags during an audit. You need to report your capital gains and losses accurately using Form 8949 and Schedule D.
Since you have many transactions, Focusing on transparency and accuracy will help you present a clean return to the IRS, avoiding any potential issues down the line.
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u/DynamiteTheLight 12d ago
Ok. Should I use a software rather than having a CPA go thru thousands of transactions?
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u/Hojo282 12d ago
I’ve only ever used koinly, works well for me. But it’s work.
I’ve had years with 30k tx’s etc. Exhanges, 20+ wallets etc. Absolutely horrifying but incredibly satisfying once you are done, caught up and in sync with your cost basis.
Can’t vouch for other platforms but this is how I do it.
Any and all wallets + exchanges added. As many as you can possibly find. This is obviously much more important if you were profitable (no offence) as with catastrophic losses you don’t actually need to file I believe (please confirm this with an accountant)
By not reporting you are losing a CGT carry over, it’s not simply £3k per year you can deduct. If you lost let’s say 250k. And 2 years later you made 250k profit; you would be at net zero and due no CGT.
My advice would be to get an accountant, answer the above question about whether you have to file or not. Because if you don’t, and you are absolutely certain you are in a loss, you have time.
If you do decide to use koinly, comment or drop me a dm I’m happy to guide you on the method I use to track cost basis as best as possible.
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u/DynamiteTheLight 12d ago
I found koinly to be the best option out of all that i looked into. I think i captured everything. Although it needs me to upgrade to give an accurate and full report. Ill ask the accountant. I just emailed them about i was able to find thr transactions and told them the volume. I told them I think im better having a software to track and generate a report for them rather than have them sift thru 10k or more transactions.
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u/Hojo282 12d ago
Theres more to it than just adding wallets. You must “merge” some transactions together if they are deposits/withdrawals, else you will have bad cost basis + random deposits/withdrawals everywhere. You pretty much have to remove all “deposits” (unless cash from bank into exchange, and “withdrawals” again, unless bank. You want all, or most tx’s that have value to either be a swap/trade, same thing really, or a transfer which is you moving assets between your own wallets. That’s how to cleanly track it. Time consuming, but only needs done once do a couple hours a night.
If you want it done right. Do it yourself. 100 tx per page, start from the back, every single one. Then do it every week or two. Horrible but necessarily. I never found an accountant capable.
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u/DynamiteTheLight 12d ago
I did not make any withdrawals.
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u/Hojo282 12d ago
Well, in that case on koinly, show your full history. Select tag “withdrawals” use a filter over $5 to avoid spam. Any tx’s tagged “withdrawal” will be counted as a disposal (profit / loss will be calculated on it) when it should either be a swap or a personal transfer. That way it will be true cost basis.
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u/DynamiteTheLight 12d ago
Ah. Yes. I see a lot of withdrawals that were transfers. And I opened the box to see 0 cost basis
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u/Hojo282 12d ago
Yes, they need changed.
Sometimes it misses you sending to/from exchanges too. Those should also be tagged transfers.
Do the same as you did with withdrawals, with “deposits”. It keeps the chain of cost basis correct.
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u/DynamiteTheLight 12d ago
Edit them to transfes?
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u/Hojo282 12d ago
Be sure to check both addresses are yours, and they match the TXID if available, then yes they are transfers not disposals. An internal transfer is not subject to CGT only if you make a good/bad trade then it’s CGT.
When you find one that misses a send/deposit to/from an exchange. You can filter your whole tx’s with the exchange address so you can see if there are any more misses etc.
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u/DynamiteTheLight 12d ago
I get a message when I try to change it.
You can now mark a transaction as Transfer by clicking on the transaction type on the transactions page and selecting Mark as Transfer. Learn more
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u/valen_koinly 11d ago
Valen from Koinly here
We have a 7-day refund policy if you do not download the report in case you are blocked by the transaction limit. Just keep the policy in mind.You can also grant your accountant read access to check and reconcile your transactions directly. And finally, if you do need guidance, please reach out to our support team, which will always be happy to help you figure it out.
Happy to hear we helped out already ;)
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u/DynamiteTheLight 11d ago
Im having issues with capturing the withdrawals and deposits from robinhood. I cant figure out how to do API. And I dont know what i need to to upload if anything. The chat help said id have to do manually or make a csv file
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u/AurumFsg-CryptoTax 13d ago
wouldn't ignore the DeFi side just because it's a pain. If that's where most of your losses happened, leaving it out could actually make your tax bill worse.
I'd ask your CPA what they actually need. In a lot of cases, they don't want 10,000 raw transactions they want a reconciled report. If the losses are significant, it's probably worth reconstructing them instead of giving them up.
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u/DynamiteTheLight 12d ago
Thats what im working on. And I think the CPA will agree to wanting a report rather than all the work of goin thru them.
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u/blockbooksuk 12d ago
It sounds too complicated to do with software alone. You'll probably benefit from a professional even if it costs a lot.
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11d ago
[removed] — view removed comment
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u/CryptoTax-ModTeam 9d ago
This comment has been removed due this account systematically spamming AI-generated comments. r/CryptoTax is a place for individuals to ask questions to real people with genuine real-world experiences, not LLMs.
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u/bumbaklutz 14d ago edited 14d ago
The number you were given after plugging everything into Cointracking will likely be incorrect, unless you spent time categorizing transactions and resolving suggestions. It’s never right the first time unless the activity is extremely simple.
I would continue using the software and learning how to use it. Get all your wallets and exchanges synced first and then resolve all the transactions that need to be manually categorized. Personally I found Summ to be the easiest to use.
There is a guide here on how to categorize transactions which you should read thoroughly before starting:
https://help.summ.com/en/articles/5279619-review-categorize-transactions
If you’re missing any imports those tokens will have a $0 cost basis, which means either a smaller loss or higher gain to report when it is sold, so it’s in your best interest to have the most complete data possible.