What is Digital Currency?
TradeLog uses the term Digital Currency to refer to products such as Bitcoin, Bitcoin Cash, Ethereum, Litecoin and others - which may also be referred to as cryptocurrency, or virtual currency.
Tax Reporting of Digital Currency in TradeLog
TradeLog reports Digital Currency transactions and resulting taxable gain/loss on Form 8949 using category C or F of the IRS form. Wash sales are not adjusted on Digital Currency trades.
Because Digital Currency is not reported on 1099-B, these trades are excluded from 1099-B sales proceeds when running the reconciliation. Select the option No 1099-B when completing that step on a Digital Currency account in TradeLog - Click here for more details.
Setting up Account(s) in TradeLog for Digital Currency
In TradeLog Software, setup a separate Account Tab for the Exchange/Trading platform or provider you use for your Digital Currency. A separate Account Tab can be setup for each individual Exchange.
Note: The Account Type should be set to Regular Cash Basis for Digital Currency accounts.
How are Digital Currency trades logged and identified in TradeLog?
TradeLog uses a Type/Mult of DCY-1 to identify Digital Currency trade history.
The Ticker field in TradeLog should list a standardized symbol for the Digital Currency product. Click here to refer to one list of standard symbols.
Symbols may vary based on user preference. However, it is important to consistently use the same symbol for proper matching of identical Digital Currency products.
Other trade record fields in TradeLog should be used as follows:
Date - The date the transaction occurred.
Time - The time the transaction occurred.
O/C - "O" is used for an opening transaction, where the Digital Currency was received. "C" is used for a closing transaction, where the Digital Currency was sold or exchanged.
L/S - Typically Digital Currency transactions will be reported as "L" for long trades. "S" would be used in short-sale situations where Digital Currency is sold/exchanged before being bought/received.
Ticker - See note above.
Sh/Contr - The number of units of a Digital Currency used in a transaction. For example, one complete Bitcoin would = 1. However, if you were to buy/sell with a fractional unit of the bitcoin that would be entered as a decimal. Note: TradeLog rounds to the nearest 5th decimal place.
Price - This would be the price/value at the time of the transaction for one (1) total share of the Digital Currency. This price should be listed in the base currency used for reporting, typically US Dollars (USD).
Type/Mult - Should be DCY-1. See note above.
Comm - Any fees associated with the individual transaction would be entered here. Use positive amounts only. TradeLog will automatically add or subtract the amount depending if the transaction is a buy or sale.
Amount - The total value of the transaction in your base currency (typically USD). This is calculated by multiplying: (Sh/Contr X Price) +/- Comm = Amount.
Profit/Loss - This is calculated automatically using TradeLog.
Notes - Additional notes can be entered in this text field, if the transaction represents an exchange of Digital Currency for good/services you may indicate that information here for reference.