ProfitStance's New Report Addresses Cryptocurrency Investors' Massive Problems In Tax Accounting
ProfitStance, the first holistic and fully developed tax reporting and accounting solution, today announced the release of its report “ The Crypto Landscape: Tax Accounting Issues and Solutions.” Developed by crypto investors for their peers, the software-as-a-service (SaaS) solution continually tracks all crypto transaction activity and is currently available for individual investors for 2018 and previous tax years. In addition, an enterprise solution is in advanced stages of development and addresses the needs of CPA firms, wealth managers, financial organizations, miners, and others.
One of cryptocurrency’s problematic and unintended consequences turns out to be the difficulty of accurately tracking the cost basis of crypto movements (buys/sales/sends/receives) from a tax and accounting perspective so that investors pay no more taxes than they actually are required to pay. Key contributing factors include the following:
- Investors are often trading multiple cryptocurrencies using multiple wallets and multiple exchanges so the tax liability “water” gets very muddy very quickly;
- No meta data is captured on crypto movements (buys/sales/sends/receives) which often penalizes investors with a higher tax liability than they actually have;
- Crypto exchanges are not providing clarity and accuracy to investors; the information they do provide is highly siloed, lacks uniformity, and is often inaccurate;
- Since there is very little enforcement by regulators (SEC, FinCen, etc.) crypto investors are left largely to fend for themselves;
- The IRS has been slow to offer guidance and/or clear regulation which has compounded uncertainty in the market and removed much of the fear / incentive investors normally have to report taxes the best they can;
- Because accurate cost basis data is so difficult, expensive, and time consuming for crypto investors to obtain, approximately 98% of them did not report taxes in 2017.
“Crypto investors are struggling to find ways to keep accurate records of their transactions, and it only gets more complicated as investors work with multiple wallets across several exchanges,” said Corey Blaser, president, ProfitStance. “With our solution, crypto investors can see the impact of every trade on a real-time basis, allowing them to have clear insight into their pending tax liability.”
Each user is protected by the highest level of security and anonymity – if a government entity subpoenas a user’s transaction information, ProfitStance’s system architecture and data encryption protocols are purposefully designed to make it impossible to comply with such a subpoena. However, ProfitStance’s embedded hashing algorithm makes it virtually impossible for a user to falsify the ProfitStance reports they submit to the IRS. This elegant solution satisfies both the market’s need for security and anonymity and at the same time it gives the IRS a way of validating the information it receives. And, every tax document produced through a ProfitStance subscription is backed by a guarantee that it will be accurate and compliant – or the company will pay up to $1 million in IRS fines and interest.