How it works
- Gather all the data from exchanges, wallets, financial institutions
- Put the data together in a single set
- Compute the gains/losses on the dispositions
What makes it hard
- I constrain myself to the way the IRS thinks about crypto, so that my work will win audits. The IRS does not think about crypto the way crypto people think about crypto.
- Cryptocurrency exchanges and wallets and financial institutions have universally bad reports.
- data gets lost to time, defunct exchanges, bankruptcy, etc.
- people believe the myth that crypto is always on a blockchain and therefore all reports are always available
- people believe the myth that things like AI make these kind of things easier.
- people like to say things like “blockchain analysis”, whatever that is, and they think saying those words aloud should magically do something an auditor would agree with
What clients do to make it hard
- don’t read emails completely or carefully
- try to think of what a question might mean or imply, instead of just answering the question directly
- speak imprecisely
- don’t keep records
- don’t trust processes which have worked for years and won audits
What I do which makes things hard
- lose myself and lose time obsessing over details
- waste time looking for answers in the blockchain instead of just asking the client for the information and moving on to other things until I get the answer
- take difficulty personally
- communicate badly
- I often forget that my job is to count pretend internet money. I act as if this stuff is real and with enough focus, it’ll add up and make sense. I’m wrong, but I can’t shake the dumb optimistic faith.