If your dad intended that you should keep the ETH coinbase he sent to you, then gift tax is the only issue and if it's below $14,000 for 2017, then no gift tax return is required. If he had you perform the transactions for him, inside your account, and then you transferred the money back to him, he should report the transaction. Keep clear and clean records of the specific transactions. You can report all of the activity if it was a gift. If not, then you should split out the transactions for your dad for his return and then you report your own transactions.
All of the transactions are reported like any investment when a buy and sell occur.
Bitcoin (and all digital currencies) are treated as personal property (see IRS 2014-21) so any profits made are recorded as capital gains income in United States Dollars (USD), and put into Schedule D.
To enter an investment sale of cryptocurrency:
· Type in
investment sales in the search box, top right of your screen, hit the
enter key· Click the
jump to investment sales link in the search results
· Follow to prompts and online instructions
Arrive at the Choose the type of investment you sold
Choose the last category Everything else (do not use for personal items, see note below)
You can report transactions in summary for the year as investments Long Term vs Short Term for reporting. You can use various for the date of purchase. Note: You can't take a loss on personal items (if you used cryptocurrency to purchase goods and services) which you report those under Other/personal items/other. If any items were purchased for personal use, then make sure only personal use cryptocurrency is recorded in the personal Items section.
Track all costs associated with all purchases, as well as dates of purchase so that you can track all costs to the appropriate sales as an ongoing process. You can use excel or some other platform for your records.
