21d • 🔥 Crypto Tax Q&A
The IRS checks this one thing first on every crypto return
Cost basis. Every time.
When the IRS reviews a crypto return, they go straight to one question: "Can you prove what you paid for this asset?" If you can't, they default to $0 — which means your entire sale proceeds become taxable gain.
Here's what I see constantly as an EA:
→ Investor buys 1 ETH for $2,000 in 2023. Sells for $3,500 in 2025.
→ Actual gain: $1,500. Tax owed: $225 (at 15% LTCG rate).
→ Missing records? IRS assumes cost basis = $0. Tax owed: $525.
→ That's $300 extra in taxes — on a single trade.
Multiply that across 50, 100, or 500 transactions and you see the problem.
The fix is simple but most investors skip it:
✅ Export your full transaction history from every exchange you've used
✅ Choose your cost basis method (FIFO, HIFO, or specific ID) and stick to it
✅ Document it — not just in your head, but on paper the IRS can see
After Big Four tax work at EY and PwC, this is still the #1 fixable mistake I see on crypto returns.
Drop your question below 👇 — what exchange or wallet is giving you the most headaches with records?
— Samuel Oduro, EA | Empower Capital | empowercapital.co
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The IRS checks this one thing first on every crypto return
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