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by anamax 1514 days ago
How does Binance know the basis of bitcoin that I transfer in?

Heck - how does Schwab know the basis of Disney stock that I bring in?

How does either one know when I acquired said assets?

2 comments

If you have stock to bring in, you bought it somewhere, right? That "somewhere" should have filed forms reporting on your purchase, kept records and stuff.

With bitcoin, a part of !!fun!! from holding non-security assets is all the accounting you have to do. Enjoy it, that's a part of a bargain. That said, other countries like Japan mandate regulated exchanged to keep track of their customers assets, assist with cost-basis computations, etc.

My point being, regulated institutions can make filing taxes easy for most of the people, with unsophisticated circumstances. Usually being an employee of a single business is considered "unsophisticated" enough to not deal with any forms, letting your employer do these things for you. There is no reason why other common life situations cannot be made as easy, like having deductions for mortgage, purchasing securities via regulated brokerages, etc.

If your situation is "sophisticated", then surely you gotta enjoy accounting and reporting then. But that should be necessary only for a fringe percentage of people.

It'd be fine to just ask for information in the cases where they don't have it, a system doesn't have to be perfect to be better.
Note that we're assuming the existence of a brokerage.

When I sell you BTC, how do you report my gain?

When I buy pizza with BTC, how does the pizza place report my gain?

No, I'm not assuming that a brokerage will have information about every transaction, I'm assuming that brokerages will have information about many transactions. It would be worthwhile to simplify tax filing in those cases even if there are other cases that do not get simplified.