US based BearTax is tapping onto a market that is literally something we know so less about – Crypto Taxation. We know less because we are based in India – where we have no set guidelines yet on how Cryptocurrency tax must be calculated.
For example – Taxation laws in the US consider every crypto transaction as a taxable event, which means that those bitcoins spent to buy ripple or ether or any other tokens also attracts tax liability.
Back home, many experts believe that is how it should be calculated as well. But since the regulators have not set out rules, crypto tax is anyone’s guess right now, even we made a guide. As long as you pay tax on your profits, you are in the safe zone. But BearTax calculates those profits for you, and if you’re in the US you can also get a proper capital gains auditable sheet.
I liked the concept and the creators of BearTax have roots in India, so after a brief chat on whatsapp I dropped an email to Vamshi Vangapally the co-founder and chief of BearTax to learn more about the platform, things that I could not gather from the platform website.
- 0.1 Let’s start with what BearTax does
- 0.2 How are the Taxes Calculated?
- 0.3 What about Deposits and Withdrawals to ICOs, Private wallets or to Unsupported Exchanges?
- 0.4 So At the end of the whole process we have…
- 0.5 How Much does it Cost?
- 0.6 Can we Expect a Tax Calculating Software for India?
- 0.7 The BearTax Team
- 1 Read More:
Let’s start with what BearTax does
“BearTax is a software that can help crypto traders and accounting professionals to calculate their gains or losses (on crypto transactions). Since we are integrated with all major exchanges and provide our calculation services for free, we have been the go to software for many users across the world.”Vamshi
BearTax allows importing transactions from multiple fiat and non-fiat based exchanges such as Coinbase, Gemini, Kraken, Bittrex, Coinspot, Bittrade, Binance, Poloniex, Huobi, OkEx, KuCoin and more. Few of the exchanges allow direct API based import while others require a CSV file upload.
How are the Taxes Calculated?
“It starts with the import of transactions from various exchanges and then our smart matching algorithms kick in on the fly. They match deposits and withdrawals across exchanges within a specific timeframe… We’ll proceed to review process for missing sources (airdrops, mining, forks etc) – once review is done, we’ll calculate taxes by FIFo or LIFO or OB(OptimalBasis). Currently we are exposing only FIFO to regular users as it’s the less ambiguous way from regulatory standpoint to calculate your gains. “Vamshi
As I said before, some regulators such as the US also considers crypto to crypto transactions a taxable event. It is imperative therefore that all taxable events are taken into considering for tax calculation. However, it may come as a shock to most when they see their tax liability as CEO of ChainStone labs Bruce Fenton puts out in his tweet.
Suppose Jane had $100k in crypto in 2017, traded it to $500k, bought alts at the peak & now they’re worth $50k.— Bruce Fenton (@brucefenton) on Twitter
How much does she have?
Actually, negative $62k.
Her crypto is $50k but she owes $112k in short term capital gains tax.
IRS doesn’t care if you still have it.
What about Deposits and Withdrawals to ICOs, Private wallets or to Unsupported Exchanges?
“If the deposits or withdrawals happens from exchanges we don’t support or wallets we don’t support – then those transactions show up in Review process. Generally on other softwares – we face a negative balance problem where sell quantity is more than buy quantity. With our review process, user can specifically account for every coin that’s been sold or deposited using proper sources (such as Gift, Mining, Airdrop, Fork, Received from friend, deposited from other exchange) for which cost basis is calculated appropriately. “Vamshi
The trading done of those unsupported exchanges can also be added manually or the list should be sent to BearTax who will add them for you.
So At the end of the whole process we have…
“End result is the amount of taxable gain or loss for an individual based on his/her cryptocurrency trades. This gives an idea on what’s the number that has to be entered in capital gains section on user’s tax filing.
For US citizens, we provide 8949 capital gains form, detailed auditable CSV form for future purpose. This CSV can also be provided to an accountant if you hire someone and they can process it accordingly for you. For citizens in other countries, we provide auditable CSV which can be used to enter values in your respective tax filing. “Vamshi
How Much does it Cost?
It’s FREE to import transactions, calculate gain/loss and view the summary of your gain/loss. But if you are a US citizen, you have to cough up some dough to download 8949 Capital gains form and auditable CSV form. The charges go from 99 cents for 20 transactions to $200 for unlimited transactions.
BearTax is also able to calculate tax liability for Australia.
Can we Expect a Tax Calculating Software for India?
“Taxation is a crucial topic anywhere in the world. India, being an enthusiastic crypto community is always on our roadmap.Vamshi
We are already working on integrating major Indian crypto exchanges – We’ll make it available and announce it as soon as possible.”
The BearTax Team
“We are a team of four, where I was an avid crypto trader and an explorer – while fiddling with lot of tools and exchanges around, unknowingly I’ve made a lot of trades which brought in a pressing need to file taxes appropriately… Teamed up with friends of mine (Prady, Arun and Hitesh), whom I’ve been known since 7 years now and launched it in just 5 weeks (thanks to our rockstar team). Prady is a Data scientist, Arun is an enterprise architect, Hitesh is a serial entrepreneur with business development skills. Prady, Hitesh and I went to same college for bachelors.”Vamshi
We need Crypto currency tax calculators in India. However, first we need some regulations around cryptocurrency. All eyes are now set to Supreme Court that was unable to hear the case last week and now is set to hear arguments on Tuesday.
Check out BearTax here