Calculating Crypto Gains & Losses vs 1099-B

[buckwheat12n]

I have a couple scenarios I'm a little confused on:

(1)  If I calculate my crypto transactions (gains/losses) myself entering them on form 8949, how does getting a 1099-B from an exchange for those same transactions affect things?  What if they choose to calculate gains and losses differently (i.e. FIFO vs LIFO vs Average Cost Basis) and there's a difference between what I report and what's on the 1099-B?

(2)  Also, when reporting the above transactions myself which box would get checked on Part 1 of form 8949 (A, B or C)?

(A) transactions reported on Form(s) 1099-B showing basis was reported to the IRS

(B) transactions reported on Form(s) 1099-B showing basis wasn’t reported to the IRS

(C) transactions not reported to you on Form 1099-B

[DianeW777]

It depends.  Gross sales must match as a grand total to the 1099-B. As long as you have your documentation on the cost basis, holding periods, etc., you should report your gains and losses accordingly.  You are required to use FIFO if you do not specifically state and track the sales.  Your 1099-B may not record basis and even if does, it's not always accurate. 

If you have a 1099-B it's quite likely Box (B) will be used because the company reporting the sales may not know your full cost basis when it comes to crypto or digital assets (most common for this new platform).  As an example, if you move it location two will not know the history of location one, if you know what I mean.  It's like a brokerage in that if you keep all of your investments in one place, they know the history of your cost basis.  If you move all of your investments to a different brokerage, they will know the cost basis history going forward but will not know anything before the day they received it.

It's important to note that if any crypto asset was not purchased there could be different ways it must be reported. The following link will provide details.

• Cryptocurrency Info Center

[buckwheat12n]

Thanks for the information!

If the 1099-B is missing Cost Basis for some sales, the total on the 1099-B would be incorrect would it not?  Therefore I would go with option (B) and report the cost basis on the 8949 for those particular sales correct?

[DianeW777]

Yes, you would report the correct cost basis for your sales.  The broker does not always have the detailed information for cost basis so they report what they have and know.  It's very common to adjust the cost basis to the appropriate and correct figures.  Be sure to use the gross sales on the 1099-B and adjust cost basis to your actual costs for the property/asset sold/traded.