Cryptocurrency and 8949 form

[thebighead]

Hi,

Using Turbotax for the first time this year to report taxes on cryptocurrency. Trying to report my capital gains. In the past I have reported each bitcoin transaction separately on the 8949, and I uploaded my .csv file to Turbotax to reflect this. However, Turbotax groups all the transactions into just one line for short term and one line for long term gains.

Is this acceptable to the IRS? I would prefer for transparencys sake that I can choose to show all of the transactions, but I acknowledge that the summary is at least accurate.

[fanfare]

IRS requires details to be listed on Form 8949,
or on your own forms (e.g. consolidated 1099-B) which have the same information and in the same manner as Form 8949.
Either way, if you choose to summarize, you have to mail the transaction details to the IRS within three business days of IRS accepting your tax return.
Exception: if you summarize Category A or Category D, Form 8949 is not needed for transactions without adjustments. No mailing is necessary. TurboTax won't ask you about wash sales if you don't check the box.

Your 1099-B will tell you what category your transactions fall into.

no 1099-B? that's category C or F.

[super]

I have been looking through the entire web to find an answer to this. I used cointracker.io and I uploaded the entire CSV to turbotax. After doing that I checked off all transactions that were taxable events. Everything seemed OK, UNTIL i downloaded my return and it only showed one line for short term and one line for long term. This is a serious issue/bug on turbotax's end. It shouldnt ever be aggregated like that UNLESS the user chooses to do that.

[Hamtaro]

I receive 1099-B form from BlockFi. Am I supposed to file that on 1099-B or file it on Crypto section to fill in 8949? or both?

[TomH17]

I just logged in to post the same question.  I hope we get an answer here!

[ReneeM7122]

Yes, Turbotax should groups all the cryptocurrency transactions into one line for short term and one line for long term gains.  This is acceptable to the IRS.  Cryptocurrency sold, exchanged, spent or converted, is treated as a sale of a property.  Like property sales or the sale of stock, any gain or loss from the sale or trade of cryptocurrency is reported as a capital gain or loss. If you buy and sell it within 12 months, it’s treated as a short-term capital gain. If you hold it for over 12 months, it’s taxed at the lower, long-term, capital gain rates.

@TomH17

[Hamtaro]

What Tom meant to ask was whether we need to fill it under 1099-B or "Crypto Currency", or both in Turbo Tax if we receive the form 1099-B?

For my case, I have 1099-B, but some of the costs were missing because the crypto were transferred from different wallet into BlockFi.

[DianeW777]

Do NOT use both.  Use the Cryptocurrency to complete the required trade/sales information for your cryptocurrency transactions..

You can do a summary of long term and then short term combinations (long term holding is more than one year, short term holding is one year or less).  Make one entry for each. You can then send the worksheets or statement with Form 8949 after your return is accepted, attached to Form 8453.

• Sale date can be the last date a sale occurred or 12/31/2020
• Purchase date can be 'Various' 

If you are e-filing your tax return, then mail your statements along with Form 8453 to: 

Internal Revenue Service

Attn: Shipping and Receiving, 0254 

Receipt and Control Branch 

Austin, TX 73344-0254

If you need a blank Form 8453, you can download this pdf, enter your address information and check the box for Form 8949 (this form is really just a cover sheet).

[AlbertB34]

Hi Renee.  I have been researching this for a week now and, although I'd love it if your answer is right, I can't find any support for that in the IRS forms, at least where the crypto exchange does not generate a Form 1099B.  Can  you explain why you think it's acceptable to the IRS?  Since most crypto exchanges do not generate 1099Bs (if they did this would make the summary okay per the IRS), the fact that Turbotax automatically prepares a single summary for the imported transactions, and provides no way to override this function, is a huge problem.  It means that the only choice is to file by mail the Form 8949 along with the Form 8453 within 3 days after electronically filing. What's crazy is that Turbotax has all of the trades and includes them on the worksheet, but simply includes a one-line summary on the form submitted to the IRS. What's also crazy is that Turbotax does not notify you that you have to mail anything to the IRS.  Apparently there is a notice like that which the user will get when the user specifically chooses to enter a summary instead of entering all the individual sales, but not where all the sales have been imported into the program and Turbotax on its own creates a summary and includes only that summary on the Form 8949.  As a result, I have just realized this is a problem and now have to go back and amend my last two years of returns. There are at least 5 threads on this forum on this topic, and there are no clear answers anywhere. How can we get the attention of someone who actually is responsible for fixing the problem at Turbotax?  Thanks for any help you can provide.

[KathrynG3]

1. Form 8949 has two main categories to classify transactions, short-term (Part I), for transactions held one year or less, and long-term (Part II), for transactions held longer than one year.
   1. Within each of these parts, there are three options: covered, non-covered, and not reported on Form 1099-B.
      1. In Part I, these are sales categories A, B, or C.
      2. In Part II, these are sales categories D, E, or F.
          
2. Schedule D is always summarized for short-term and long-term transactions. The details are always provided on Form 8949 for all investment transactions associated to the tax year.
    
3. Form 8453 is mailed with copies of Form 8949 when details are entered in summary and if the sales categories are not Box A or Box D, or there were adjustments to the basis unless the details are otherwise provided.
   
   When Cryptocurrency is not reported on Form 1099-B, the transactions will be reported on Form 8949 using Part I, category C and Part II, category F.
   1. The TurboTax treatment will depend on the volume of transactions imported whether a summary was reported or the details were included. Check Form 8949 in prior year returns.
   2. Currently, there are only limited instances available to attach PDFs to tax returns. If it had been necessary for you to submit Form 8453 with Forms 8949 in the past, you would have been notified. 

For more information, see: Do I need to fill out or mail in Form 8949?

IRS Frequently Asked Questions on Virtual Currency Transactions

@JuneC1958

[zvezdochke]

I understand that TurboTax aggregates cryptocurrency transactions by short/long terms on form 8949. Do I need to mail the complete list of transactions? Could you advice what forms should be mailed to IRS?

[fanfare]

Generally you can aggregate cost basis if you sell various lots on a single day.

Then you can use "various" for date acquired. no mailing is required.

If TurboTax aggregates all your sells for the year into one transaction, the Date Disposed information is lost.

This would be incorrect.

BUT the end result is the same.

In such a scenario, whether you want to mail transaction detail is your call.

OR
Use another tax software provider that does it correctly.

[fanfare]

@zvezdochke 

IRS requires details to be listed on a Form 8949,
or on your other forms (e.g. your spreadsheet) which have the same information and in the same manner as Form 8949.
Either way, if you choose to summarize, you have to mail the transaction details to the IRS within three business days of IRS accepting your e-Filed tax return.(unless you have attached a PDF of the transactions details to your e-Filed return. It's currently not clear whether TurboTax does or does not offer this feature).
Exception: if you summarize Category A or Category D, Form 8949 is not needed for transactions without adjustments. No mailing is necessary.
If you don't have a 1099-B from coin base or other exchange your sales category is C or F.

There is no exception for these categories.

[antsofcourse]

They don't. But ok, sure. You do you.