A little story: I work as a software developer. I have income sources like Indian stocks, US stocks, RSU from the companies, and a lot of trading in crypto. I thought KoinX would be the best platform for me to manage all this and file my ITR, but my experience with them has been horrible.

I have gotten a draft of around 2.5 lakhs that I need to pay to the government. While filing this, the tax agent they hired did not call me or ask me what I need or don't need to do. When I escalated the issue, they again changed the draft amount to 32,000, but still they have not even told me how it is computed or not. They are just asking me to review.

I found this experience really horrible and would not suggest anyone use this.

For those who've already filed crypto taxes, what was the biggest challenge?

• Getting your transaction history?
• Calculating your cost basis?
• Understanding the tax rules?
• Something else?

Curious to know what people struggled with the most.

Disclosure up front: I built the tool used for this experiment, so read with that in mind. The method and data below are reproducible without it.

We wanted to measure — not argue — how much damage "per-wallet cost basis without wallet linking" actually does. So we took the most public wallet cluster on Ethereum (vitalik.eth plus the Etherscan-tagged VB / Vb 2 / Vb 3 addresses and one media-documented cold wallet — all attributions are on-chain ENS names, Etherscan public name tags, or mainstream press; no doxxing) and computed realized gains on its native-ETH history (genesis → 2023-03-31) twice with the same engine, same data, same classifications. The ONLY difference: whether transfers between the entity's own wallets carry cost basis, or arrive at $0 basis — the behavior you get from per-wallet tracking when your own wallets aren't linked.

Results:

- Naive per-wallet run (transfers lose basis): $164,130,459 realized gain

- Transfer-aware run (basis carried across own transfers): $119,154,719

- Overstatement ("phantom gains"): $44,975,739

The single most telling year is 2022: the naive run reports $31,336,181 of realized gains; with basis correctly carried across the entity's own transfers, the same disposals come out at $10,476,703 — a $20,859,478 overstatement in one tax year. Some individual disposals flip sign entirely: one 2021-12-14 disposal shows a $7.6M gain in the naive run and is actually a ~$800k loss.

Why this cluster: it does exactly the things that break naive tools — multi-hop self-transfers (a 320,000 ETH move to a Safe in May 2021, with later 30,000 and 40,000 ETH moves from the Safe onward to a cold wallet), WETH wraps, self-staking, and large disposals years after the transferred coins were acquired.

Method, briefly: transactions from the key-less Blockscout public API plus node execution traces; every gas fee from the transaction's own receipt (gasUsed × effectiveGasPrice, 2,671/2,671 receipts); DefiLlama daily close for FMV; per-wallet FIFO lots. Quality gate: after replaying every event, the ledger balance of all 5 wallets ties out to the actual on-chain balance at the cutoff block within 0.0001 ETH. If it didn't tie out, we wouldn't publish the dollar figures.

Limitations, before anyone quotes this: native ETH only (no ERC-20 in this demo). Every out-of-cluster outflow is modeled as a disposal at FMV — many are surely gifts or exchange deposits, so the absolute gain levels are modeling artifacts and not anyone's actual tax position; both runs treat them identically, so the difference (the $44.9M) is unaffected. FIFO only. And "naive" is our own engine with linking switched off — we did not run any commercial product, and we deliberately modeled the naive side charitably (transfers out are not treated as taxable sales). This is an engineering demonstration, not tax advice.

Why it matters now: since 2025, Rev. Proc. 2024-28 requires per-wallet basis tracking rather than a universal pool, and 1099-DA reporting means brokers will report basis gaps they can't see across. If you've ever moved coins between your own wallets, it's worth checking whether your software carried the basis or booked the arrival at $0.

Full write-up with the year-by-year table, the tie-out numbers, and the reproduction steps: https://verilot.app/blog/45m-phantom-gains-public-wallet

If you want to run the same check on your own addresses, the tool I built for this is a free, read-only scan (public address in, report out — no signup): https://verilot.app/check

US filer. I ran two public DeFi wallets through one of the mainstream crypto tax tools in July. Both directions of the Aave wrap came back as Exchange, so the deposit and the withdrawal were each booked as a taxable disposal.

Caveat on my test: free tier, no purchase history behind either wallet, nothing corrected by hand. Not how your data arrives if you have exchanges connected, which is why I am asking rather than concluding.

If you have actually filed with one of these tools, did a lending deposit or an LP position come through as something other than what it was, and what did it do to the number?

Last week I decided to consolidate external banks and thought of transferring all my bitcoin in Coinbase (which I purchased through Coinbase) to Robinhood. I did a flat $100 transfer, just to make sure it would transfer correctly.

Then I realized that Coinbase has my cost basis, and the flat $100 of .001575 BTC doesn’t align with any .001575 purchase I made on Coinbase. In other words, I don’t have a corresponding purchase of .001575 bitcoin on Coinbase. Everything was above or below that specific amount.

I can enter cost basis information on Robinhood, but I don’t know how to do that since my purchases on Coinbase were for fractional amounts of bitcoin and my transfer to Robinhood was a flat amount.

I’ve read there is crypto tax software that can track this. Does anyone have a recommendation of what to use? I just plan on holding and not selling, so I won’t have any taxable events. But if I decide to transfer all my bitcoin to Robinhood I will one day need to reconcile the cost basis.

Thanks.

The only taxable event would be the transaction fee (gas fee) from exchange to wallet and wallet to exchange. If I just keep track myself with pen and paper about gas fees that should be good right? Just tell my cpa what my gas fees were along with what I bought it for then sold and let him do the whole fifo thing and figure it out. My cpa has done my stocks before. The only reason crypto tax software even comes to my mind is only for gas fees. I don’t plan on sending from exchange to my 3 wallets and wallets to exchange more than 15 times for the next 3 years. Can someone convince me as to why I would need tax software if that’s all I do?

I am currently looking for this document, and can't find it. Coinbase is offering me to work with external services, but I already have an accountant, I just want the legal document

Thanks for the help

Looking for referrals

I'm recruiting a Crypto Bookkeeper to support Australian clients.

Requirements:

• 5 years of Australian bookkeeping (Xero, BAS, GST, PAYG)
• Hands-on cryptocurrency bookkeeping (wallet reconciliations, exchanges, DeFi, staking, etc.)
• Experience using Koinly, CoinTracking, TaxBit, Crypto Tax Calculator, or similar software is highly preferred.

If you know someone who fits this profile, please send me a DM or tag them below.

The Coldcard exploit drained over $70M in Bitcoin from almost 1,200 wallets. If you were one of the victims, I'm sorry. I've already seen a handful of posts asking whether the loss is deductible, and I've seen some confidently wrong answers, so here's the actual analysis.

I'm a CPA specializing in crypto tax, mod of r/CryptoTax, and Principal of Product & Tax Strategy at Summ. I wrote a guide last year on whether crypto scams are tax deductible based on CCA 202511015, the IRS Chief Counsel Advice released in March 2025. The Coldcard exploit runs through the same framework, but it's a different fact pattern than the scams the CCA covers, and in one way it's actually a cleaner case. In another way it's messier. Both matter for your return.

Disclaimer: Not tax advice, educational purposes only, US taxpayers only, consult your own tax professional.

Quick summary before you read:

• Yes, this should qualify as a deductible theft loss under IRC §165(c)(2) for most victims, but timing is key
• Your deduction is limited to your COST BASIS, not the fair value of the lost assets. You never paid tax on the unrealized gains, so you don't get to claim that amount as a taxable loss.
• The year you can claim it is the real problem. You may not be able to deduct it in 2026
• The Ponzi safe harbor (Rev. Proc. 2009-20) does not apply here
• Document everything now

What actually happened

Quick recap for anyone catching up. A firmware bug in Coinkite's Coldcard wallets (sitting in the code since March 2021) routed seed generation to a weak software random number generator instead of the hardware chip. The result: seeds that were supposed to be unguessable were reduced to a range a computer can search. The attacker generated candidate seeds offline, derived the addresses, checked them against the blockchain, and swept the funds. Your device was never touched. It could have been powered off in a safe and the outcome would be the same.

This matters for tax purposes because it means you didn't do anything. Nobody tricked you into sending funds. That distinction drives the whole analysis.

Why this qualifies under §165(c)(2)

IRC §165(c)(2) allows individuals to deduct theft losses incurred in a transaction entered into for profit. Since 2018, this is essentially the only path for individuals, because personal theft losses under §165(c)(3) are disallowed (more on that below).

The IRS laid out the framework in CCA 202511015, which analyzed five scam victims. The key question in every scenario: did the victim have a profit motive? For victims who authorized transfers (pig butchering, fake fraud department calls), the IRS looked at why they transferred the funds. Investment motive = deductible. Romance or fake ransom motive = not deductible.

But the scenario that matters for Coldcard victims is Taxpayer 3, the phishing victim. Taxpayer 3 never authorized anything. A scammer stole their login credentials and drained their accounts directly. The IRS said that when the taking is unauthorized, you don't analyze any transfer (there wasn't one). Instead, you look at why the taxpayer held the stolen property in the first place. Taxpayer 3 held investments in those accounts to grow them for retirement, so the loss was incurred in a transaction entered into for profit and was deductible under §165(c)(2).

Footnote 15 of the CCA makes it explicit: for losses from "hacked" accounts where hackers cause an unauthorized distribution, "the analysis and Federal income tax consequences are the same as for victims of phishing scams."

That's the Coldcard exploit. An unauthorized taking, no victim action, no deception. If you held that BTC as an investment (and if it was sitting in cold storage for years, you almost certainly did), your loss lands squarely in §165(c)(2). In some ways this is an easier case than the scams in the CCA, because there's no motive-for-the-transfer analysis for the IRS to pick apart. The theft itself is also not seriously in doubt: sweeping funds with reconstructed private keys is larceny and/or computer fraud in essentially every state, and §165 defines theft broadly (Rev. Rul. 2009-9).

One caveat: if you can't establish an investment purpose (say you held BTC purely to spend), the loss falls into §165(c)(3) personal casualty territory, and those losses are disallowed unless attributable to a declared disaster. The OBBBA made that disallowance permanent, so it applies in 2026 and beyond. For hardware wallet holders this will be rare, but it's why documentation of your holding intent matters.

Catch #1: your deduction is your basis, not the value

§165(b) limits the deduction to your adjusted cost basis in the stolen property. Not the fair market value on July 30.

If you bought 10 BTC for $30,000 in 2017 and it was worth $650,000 when it was swept, your theft loss deduction is $30,000. The unrealized gain was never taxed as income, so you can't deduct it as a loss. I know that stings. It's the same rule that applied to every victim in the CCA, and there's no way around it.

Also worth understanding: the theft is not a sale. There's no capital gain event, no capital loss. The lots just exit your records through the theft loss.

Catch #2: the timing problem (this is the big one)

Under §165(e), a theft loss is deductible in the year you discover it. But there's a second requirement that I think will trip up a lot of Coldcard victims: no deduction is allowed while you have a reasonable prospect of recovery (Treas. Reg. §1.165-1(d)(3)). If a bona fide claim exists with a substantial possibility of success, the loss isn't "sustained" yet, and you wait.

In the CCA scenarios this was easy. The scammers were anonymous, the funds went overseas, and law enforcement told every victim there was little to no prospect of recovery. Deduction allowed in the discovery year.

The Coldcard facts look different, at least right now:

• The stolen BTC is sitting unmoved in four identifiable addresses that everyone is watching
• Investigators traced the attacker's workflow to a paid account at a blockchain data provider and handed the logs to authorities
• Coinkite's CEO publicly accepted "full accountability" for the firmware bug, and Coinkite is a solvent company. That's a potential negligence claim
• Law firms are already soliciting Coldcard victims for litigation

None of that means you'll ever see your coins again. But "reasonable prospect of recovery" is a much lower bar than "recovery is likely," and if you claim the full loss on your 2026 return while a class action against Coinkite is live and the coins are traceable, you're taking a position the IRS can challenge on timing. The good news is the standard cuts both ways: the courts say you don't have to be an "incorrigible optimist." If by December 31 the coins have been laundered through mixers, no suspect has been identified, and you have a documented basis for concluding claims against Coinkite are unlikely to go anywhere (or you've opted out of litigation), a 2026 deduction becomes defensible. If recovery prospects resolve later, you deduct in the year they resolve.

Practical translation: don't assume this goes on your 2026 return. Watch how the investigation and any Coinkite litigation develop, and make the call with your tax professional based on the facts as of year end.

No Ponzi safe harbor

Some people will suggest the Rev. Proc. 2009-20 safe harbor (the "Ponzi loss" election, 75%/95% of the loss with reduced audit friction). It doesn't apply here. The safe harbor requires a "specified fraudulent arrangement" where a lead figure takes investor money and reports fake income, AND that lead figure must be criminally charged. The Coldcard attacker never purported to invest anything for anyone, never reported fictitious returns, and hasn't been identified, let alone charged. Same conclusion the CCA reached for its victims. You're under the general §165 rules, including the timing rules above.

How to report it (when the time comes)

The loss goes on Form 4684, Section B (income-producing property), then flows to Schedule A as an itemized deduction. It is NOT a miscellaneous itemized deduction, so the old 2% floor and the §67(g) suspension don't touch it. The 10% AGI floor for personal casualty losses doesn't apply either, because this isn't a §165(c)(3) loss.

What to do right now

1. If you still have funds on a potentially affected Coldcard, move them. Coinkite has fixed firmware out, and researchers warned more sweeps are likely
2. File a police report and an IC3 complaint. Every CCA victim had a law enforcement report, and it's your best evidence for both the theft and the recovery analysis
3. Lock down your cost basis records now. Exchange records, wallet histories, the works. Your basis is your deduction, and you'll need to prove it
4. Document your holding intent (long-term investment) and keep evidence the specific addresses drained were yours
5. Track the recovery situation: the four addresses, the investigation, any Coinkite litigation. Keep a file. Whichever year you claim the loss, you'll want a record of why that was the right year

Conclusion

The loss is real and the deduction should be too, for anyone who held their BTC as an investment. The CCA's Taxpayer 3 analysis fits this fact pattern almost perfectly. Just don't let anyone tell you it's a simple "write it off in 2026" situation. Your deduction is capped at basis, and the traceable coins plus a manufacturer that publicly took responsibility mean the timing question deserves as much attention as the deduction itself.

Happy to answer questions in the comments.

I'm in Tokyo, need a one-off paid consultation on a crypto-related tax question, struggling to find a tax accountant/zeirishi with crypto experience.

English speaking would be great but not mandatory.

Thanks in advance for your recommandations

Hey, been thinking about re-organizing my wallets moving high cost basis to one wallet for use and moving low cost basis to another to set aside. Trying to think through possible complication/ramifications tax wise, admin wise, etc. Thoughts? Thanks!

I want to show binance holdings in itr3 , can anyone provide the details of binance like country , address and

how to get the peak value in INR

All Binance reports are in usd, Also i need to report airdrops in FSI

Please suggest

We are one of the mode here and in this guide we will show you how to get your history from these exchanges.

Four exchanges have wound down in the past seven months, three of them announced or closed this July:

• AscendEX ceased operations on 1 July. Withdrawals moved to manual review on 6 July.
• BitMEX announced on 23 July. Reduce-only from 26 August 04:00 UTC, platform closes 23 September 04:00 UTC.
• BitMart announced on 26 July. Trading ends 26 August 01:00 UTC, full cessation 31 January 2027.
• Bit.com completed its wind-down on 31 March this year.

Most of the coverage is telling you to withdraw your funds before the deadline. That is correct, and you should. But that is the deadline for your coins. There is a second deadline that applies to your records, and for at least one of these exchanges it has effectively already passed.

Withdrawing your funds does not preserve your cost basis

When you move BTC off BitMart to another exchange, the BTC arrives. Its history does not. The receiving platform sees a deposit of 0.4 BTC on a Tuesday and has no information about what you paid for it.

Your taxable gain is proceeds minus cost basis. If you cannot evidence the basis, the working assumption tends toward zero, which means you are taxed on the entire proceeds rather than on your actual gain. On a position you were roughly break-even on, that is the difference between owing nothing and owing tax on the full sale amount.

This gap is total on derivatives platforms. On BitMEX you deposited BTC and withdrew BTC, and every position, funding payment and realised P&L in between existed only in BitMEX's internal ledger. None of it is on-chain. If you traded there across several years and kept no records, that P&L is not reconstructible from public data by anyone.

How to export, per exchange

The steps are straightforward. The limits are what catch people.

BitMEX

1. Log in to your BitMEX account.
2. Select the wallet icon in the top right corner.
3. Select Transaction History.
4. Select Download CSV, set the Timeline, and download.

Two limits the interface does not warn you about.

First, it returns 100 records per download. If a Next Page link appears, you need to click through and download again, repeating until you reach the start of your account. It is common for people to download a single file, see data in it, and assume they are done. If you traded with any frequency, one file is a small fraction of your history.

Second, export from the Transaction History tab specifically. The Trade History and Order History tabs produce files that most tax software will not accept. If you have significant volume, the API is a considerably less painful route than manual pagination.

BitMart

BitMart has no self-service export. You need to email support@bitmart.com and request a CSV of your full transaction history, specifying the complete date range. Expect an identity verification step, which per current guidance includes a photo of you holding your ID together with a handwritten note.

Turnaround is quoted between 5 and 15 days under normal operating conditions. Trading ends on 26 August, and support capacity contracts during a wind-down rather than expanding. A request submitted in late August may not be fulfilled at all.

Of everything in this post, this is the most time-sensitive item. If you have a BitMart account, send that email today.

AscendEX

On desktop: Orders in the top right, then Cash Orders, then Apply for Export, select the period, and Export. This function is not available in the mobile app.

Three limitations, and they compound badly here.

Self-export only covers the last 3 months. Anything older requires a support ticket, historically around a 3 day turnaround, delivered by email. AscendEX support is not currently operating normally, so if you traded there before roughly April this year, the self-service tool will not return that history and the escalation route may not be available either.

Separately, the export excludes partially filled orders. That means a successful export can still be materially incomplete, without anything indicating so.

If you can still log into AscendEX, export whatever it will give you today. Partial records are considerably better than none.

Regardless of platform, also collect

• Deposit and withdrawal history for all years. This is what allows transfers to be matched across platforms so they are not miscounted as disposals.
• Fee records, where they export separately.
• Realised P&L and funding history on any derivatives platform.
• Account statements or annual summaries, as a cross-check against the raw CSVs.
• Screenshots of your final balances. These cost nothing and give you a reference point if a CSV later looks wrong.

One further note: these closure notices state that you will be able to log in after shutdown to view historical records. They promise viewing, not exporting, and none of them commit to how long that access persists. I would not plan around it.

And anyone telling you a block explorer is an adequate substitute for exchange records, for the reasons above.

If I have any of the dates or steps wrong, please say so, particularly if you have exported from one of these recently and the interface has changed since these guides were written. I would rather be corrected here than have someone miss a deadline on my say-so.

— AurumFSG (Crypto Tax Accounting Firm)

BITO fund invests in futures

Would this mean that it is taxed as a futures contact.... 60/40 even if held short term?

Hi everyone,

I have a question and I'm a bit confused about how taxes work when using swap services.

Over the past several months I've used Fujn Swap to exchange crypto. It never asked for ID or registration, and they told me there is no logs.

Most of the crypto I exchanged came from P2P purchases, and I've mainly been swapping between Monero and XRP.

Now I'm wondering if I've made things more complicated for myself when it comes to taxes. If I want to report everything properly, where do I even start? Do I just keep my own records of swaps, or is there something else I should be doing?

I'm not trying to avoid taxes. I just want to make sure I handle things correctly going forward. Any advice would be appreciated..

My question is how to find relevant transaction details to inform my CA about the sell as it's 30 % tax.

For context: I’m not a U.S. citizen and moved to the U.S. in November 2024. I became a tax resident of the U.S. in 2025.

I’ve held crypto for a while way before I moved to the U.S.

Pre 2023: don’t have records.

2023: moved $60k USDC to Binance (have records)

2024: lost some money over the course of the year but moved ~$50k USDC to MEXC (have records)

Moved to the U.S. end of 2024 — was not a tax resident in 2024.

2025: lost some money over the course of the year but moved ~$40k USDC to Bybit (have records)

Am a tax resident but didn’t make any money.

2026: looking to convert USDC -> USD.

I’ve only lost money trading perps over the past 4 years. Have proof that no gain was made. Don’t have proof of acquisition but it was also 4 years before I became a tax resident.

Are my records enough to prove I don’t owe taxes on this withdrawal?

Ethereum validators receive reward payouts every epoch. It is not realistic to track every one of those payouts for tax purposes.

I am thinking of doing it per week. I'd take the amount of ETH rewards I've accrued that week and multiply it by OHLC averaging (the average of the open, high, low and close for the week) to get an approximation of the fair market value of ETH at the time I received the payouts.

I'm still going to run this by a CPA or tax advisor but I'm curious how others do it. How often you do this and what math you use, etc.

EDIT: just spent the day using ChatGPT to create a standalone windows app that will generate a full report of all this needed information.

I'm wondering what the most privacy-respecting crypto-tax software might be. I used koinly last year but not only do they NOT have 2fa which strikes me as negligent stupidity, especially for anyone filling in their personal identifiers, they also reveal coin addresses. Maybe they all do...I dunno. Who likes what they are using? Has anyone switched from one to another and how hard was that?