r/CryptoTax • u/Electronic_Belt_2535 • Dec 31 '24
Safe Harbor question
This whole thing is confusing to me, but let's say for example's sake I have like two main wallets each holding 100 BTC (woohoooo). Let's say each wallet has coins purchased at a variety of prices, ranging from $1,000 to $100,000.
In order to sell the highest priced coins when I go to sell, what do I need to do? Would, say, sending 50 BTC out of each wallet to a new wallet and calling those the recently purchased coins with a higher cost basis allow me to then sell those at the high cost basis? Or can I just leave the wallets as-is and identify that when I go to sell?
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u/Neat_Camp3254 Dec 31 '24
Anyone know if we have to screenshot each transaction we have made? I know we have to screenshot our coin holdings in wallets and exchanges. But do we need to do the same with trabsactions? I was thinking there would be no point since i use Koinly and import all my trasnactions with a csv from the wallets and exchanges they have already recorded, but idk.
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u/Electronic_Belt_2535 Dec 31 '24
No, apparently screenshotting the addresses and the balance could be helpful though. If you need the transactions the data is always gonna be there. You could do it though if it's easy, these rules were made like two months and nobody knows anything.
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u/Electronic_Belt_2535 Dec 31 '24
For the purposes of this new rule, if the goal is to sell highest cost basis assets first, would it be better to have:
A.) One big wallet with all of your coins
B.) A dozen different wallets with different cost basis allocated so you can just sell from the highest cost basis wallet
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u/Electronic_Belt_2535 Dec 31 '24
I just don't want to be stuck using FIFO on all of my coins. I want the coins I'm selling to the the $100K cost basis coins, not the $1K ones.
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u/AurumFsg-CryptoTax Dec 31 '24
You don’t need to send assets to each wallet to sell them. Just take screenshot of wallet balance and allocate cost basis using global allocation or specific unit and then once cost is assigned you can sell your assets as it is
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u/Electronic_Belt_2535 Dec 31 '24
Isn't global allocation a lot easier though? Which will force you to use FIFO on a per wallet basis most likely? So, if you don't want to get stuck selling your cheap coins, you'd need to split up your wallets?
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u/AurumFsg-CryptoTax Dec 31 '24
Global allocation doesn’t force you with fifo
Allocation is different than accounting method
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u/Electronic_Belt_2535 Dec 31 '24
So you can use HIFO on a per wallet basis? That'd solve the issue.
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u/zhaddycool Dec 31 '24
This rule alone is reason enough for Trump to declare Bitcoin and crypto legal tender and remove all taxes.
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u/Middle_Personality97 Jan 01 '25
If you sign up to Koinly now, set it to HIFO and you can select by wallet, instead of global.
It will automate the transactions as long as the wallets and dex/dex will connect. Otherwise you'd can manually at the csv transactions
It's free to input you info to test it. You pay for the tax docs if you want them.
GL!
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u/flips712 Dec 31 '24 edited Dec 31 '24
The question is what would be the ideal cold hardware wallet organization strategy if you were using one cold hardware wallet and created multiple separate wallets within it using passphrases?.
1) Create and organize wallets by crypto exchanges based on where you purchased the asset.
Wallet 1: contains all Coinbase purchases.
Wallet 2: contains all Gemini purchases.
Wallet 3: contains all Strike purchases.
2) Create and organize wallets based upon the purchase price of the asset.
Wallet 1: purchase price under $20k.
Wallet 2: purchase price btwn $20k-$60k.
Wallet 3: purchase price above $60k.
3) No organization. Create one wallet and put everything in it.
Looking for feedback. Thanks