I want to make sure I understand what a Gain/Loss Report is without a 1099B, 1099Misc, or Form 8949.
In 2017, I bought some BTC on Coinbase. In previous years, FreeTaxUSA always asked if I sold crypto, so I never reported anything since my investment has just been sitting in Coinbase, until now.
I let it sit until 2024, when I converted $20 worth to Ethereum to capitalize on a promotion they was running. This conversion of BTC to ETH means I technically sold BTC.
I downloaded the Gain / Loss report that reports my one transaction. Do I simply report the transaction on the "one at a time" option in FTUSA, as seen in this video?
Furthermore, FTUSA asks:
Was the basis reported to the IRS on Form 1099-B, Box 12?
- Yes (Form 1099-B, Box 12 is checked)
- No (Form 1099-B, Box 12 is NOT checked)
- I didn't receive Form 1099-B (or a substitute statement)
There is no option to put "I did not receive Form 1099B but I did receive a substitute statement," as I believe a Gain / Loss Report is a substitute statement.
How can I file this one transaction properly?
Any advice would be greatly appreciated!
Answers
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Hi theonewhoistaxed45, you are correct that exchanging one cryptocurrency for another is considered a sale of the original cryptocurrency. You are on the right track. In your situation, it sounds like it would be appropriate to enter the transaction "one at a time" if you just have the one transaction to report.
Almost everyone with investment sales will get a Form 1099-B or a substitute statement from their broker. A substitute statement is essentially a re-formatted Form 1099-B, which often lists out all of your information in columns instead of boxes.
If you do have a substitute statement, then you'll generally want to answer either Yes or No to the question referring to Form 1099-B, Box 12.
Does it indicate anywhere on your gain/loss report that the basis of your BTC was reported? Look for descriptions such as "Basis not reported", "Covered", "Noncovered", "Box 12 checked". Covered means the basis was reported, while noncovered means it was not. If box 12 is checked, the basis was reported; if Box 12 is unchecked, the basis was not reported.
Alternately, your report may refer to Box A, B, C, D, E, or F. Boxes A or D mean your basis was reported to the IRS. Boxes B or E mean your basis was not reported to the IRS. Boxes C or F mean you didn't receive a 1099-B (or a substitute statement).
If you don't see any indication of whether or not the basis was reported to the IRS, you can reach out to Coinbase for clarification.
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Hi Henry, thanks for the reply.
The Gain/Loss Report does not say anything like "Basis not reported", "Covered", "Noncovered", "Box 12 checked."
According to this page, Coinbase only needs to report “miscellaneous income” over $600. However, taxpayers report all of your capital gains and losses.
"As the name suggests, your gain/loss report is a roundup of every transaction you made on Coinbase that resulted in a capital gain or loss, like selling, spending, or converting crypto. Note: today, Coinbase won’t report your gains or losses to the IRS."
So my question is, given that the gain/loss report is a substitute statement, how should I properly file it?
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Based on what you have described, it sounds like you have a substitute statement and the basis has not been reported to the IRS. In that case, you would select "No (Form 1099-B, Box 12 is NOT checked)" in the software.
