Algarve Blockchain Community (ABC)

One of the main reasons people become frustrated with crypto tax software is that they have gaps in their data. BitMEX, BitMart, and AscendEX all recently announced that they were closing down. If you did not download your transaction records before access was removed, you are left with gaps in your trading history. Without those records, it can become difficult to prove when you acquired your assets and what you paid for them. When crypto tax software does not have complete information, it may report higher gains than you actually need to include on your tax return. That can overstate your taxable income and cause you to pay more tax than necessary. Missing crypto data is very common, but there are ways to rebuild parts of the record. For example, you may still have trade confirmation emails from an exchange. These emails can show that, on a particular date and time, you bought or sold a specific asset. Although they are not the same as a complete transaction history, they can still serve as supporting evidence. We used this approach for a client we defended against the IRS who had moved a large amount of Bitcoin from an old exchange that had closed into his Coinbase account. The IRS challenged the incoming Bitcoin transactions during the appeals process because we did not have the original transaction history from the closed exchange. However, the client still had email confirmations from the old exchange. Those emails aligned with Coinbase’s records showing the incoming Bitcoin transactions. Together, the records helped demonstrate that the Bitcoin arriving in Coinbase was not new income. It was a transfer of the client’s own assets and therefore was not taxable as income. Because we were able to prove that, the audit was closed with no change to the client’s tax assessment. This is why preserving every available record matters. Even when a complete transaction history is missing, emails, wallet records, and receiving-exchange data may help reconstruct what happened.