Virtual currency exchange Coinbase has unveiled a calculator to help users determine the amount they owe the U.S. Internal Revenue Service. This coincides with the rapidly approaching tax season in the United States. In an online posting the digital wallet provider and crypto exchange said that the tool could be used in generating reports outlining the capital losses or gains on its platform but not on other exchanges.
“Remember, this report only details transactions associated with your Coinbase account. In order to create a complete view of your digital asset investments, you will need to download similar reports from all other exchanges you have used,” wrote Coinbase.
Capital gains on cryptos
Earlier in the year Coinbase featured prominent reminders for its users of the fact that capital gains on sales of cryptocurrencies were taxable under U.S. law. Four years ago the Internal Revenue Service issued a directive saying that digital currencies would be treated as property which is taxable as opposed to a currency. Recently the cryptocurrency firm reported clients numbering over 13,000 to the IRS.
While some will find the Coinbase tax calculator useful there are those who will take an opposite view. This includes clients whose virtual currencies are stored in hardware wallets as well as those who had conducted transactions over GDAX. Such individuals will have to address the tax obligations that fall on those transactions separately.
Barclays Bank deal
The launch of the tax calculator comes in the wake of the U.K. subsidiary of Coinbase securing a bank account with Barclays. This will make the process of depositing and withdrawing money for the U.K. customers of Coinbase much easier. Previously such transactions were processed via an Estonian bank. This coincides with the Bank of England governor, Mark Carney, arguing that the regulations of virtual currency exchanges should be similar to that of securities trading.
Many banks have avoided dealing with cryptocurrency startups over concerns that they are too risky due to the perception that transacting with such outfits will make them vulnerable to charges of terrorism financing and money laundering. As a result many crypto exchanges in Europe have been dealing with private lenders that are little-known in countries where virtual currencies are more readily accepted such as Poland and Gibraltar.
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