I have been requested by ZH canton to explain a significant jump in wealth in 2021, which was driven mostly by crypto. Basically on January 1st 2021 I had a crypto portfolio which I almost fully liquidated it in September 2021.
How would you go about explaining the capital gain occurred in 2021? Shall I use a dedicated service like Koinly to generate a tax report?
Many thanks for your advice.
You did declare your crypto as wealth in your tax return, didn’t you?
Not sure why you’d want to use a dedicated service? If you traded in crypto, you declare those trades with a report from the broker/exchange/trading platform that you made those trades?
Yes, my crypto assets were fully declared. Unfortunately my broker does not provide a report with all the trades but only a CSV file with all the transactions. That is why I was considering using Koinly to generate a report on my net gains on cryptos.
No trade confirmations or similar? Honestly, sounds a bit shady to me.
Why not declare the trades in your tax return and send them the CSV then?
Maybe they’re providing individual trade confirmations (as a PDF, for instance) but no other summary of trades than the CSV.
I would provide the CSV then, along with the yearly statements (end of 2020 and end of 2021). Report may be helpful - though I’d advise them that it was compiled with third-party software/service.
This is what I was thinking too. I was just wondering if the employees are even able to open a CSV file though
How does one report trades on DEXes?
I strongly assume the tax authorities have micrsoft office
They will let you know if they are not able to open your file…
There are tools that let you export the information in a nice format, for instance: https://rotki.com/
I guess you could also send them the history of your ERC20 balances and the tx hashes of the trades, they could then check the chain and decode the calldata to have a complete proof of all trades. That’s what I did when the compliance dept. of a bank wanted to have details, but I am not sure if they really understood what I sent them😄
Just out of curiosity how much higger(% or total if you want to share with us) was 2021 ending balance compared to 2020 to trigger this request?
Anybody with the Office suite or an equivalent (which is virtually everybody with a computer) can easily open a CSV file. If you have doubt about them conducting the importing process correctly and easily enough to maintain their goodwill, you can import it yourself and save it as an XLSX file. You might export/print it to PDF too and provide that along for good measure.
I worked for a crypto startup and got a token allocation, so it was $0 to around $150k when I sold.
Hmm shouldn’t that be partially income if it was from your employer?
Maybe just send an email and say: “these bitcoins went from X to Y. Hope that explains it.”.
Yeah it was partially and I declared it as that, but I still had to explain some of the growth, as the tokens were worth much less when I received them and I swapped them to different other tokens which then appreciated pretty heavily.
So you produced a word document? Was it in English or German? Thanks
Yes just a small letter that lists the transactions. In German, but I think that does not matter.
FYI I decided to use Koinly as I have a lot transactions and many wallets and CEX profiles and this tool seems good to me. Any experience with Koinly anyone?
I would simply say first that it’s was coming from crypto sold. Only after if they ask provide more details.
Especially, as the crypto were declared before.