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Unrealized Gain and Loss Reporting Now Available

We’ve just recently gone live with a new feature here at Libra, Unrealized Gain and Loss Reporting. If you’re new bitcoin or haven’t had that much experience accounting for capital assets (e.g. real-estate, stocks, mutual funds, etc.), the phrase “unrealized gain/loss” might be something you’re not so familiar with. Don’t worry, it’s a concept that’s super-easy to understand.

Basically, when you own a capital asset, which can be a number of things – like a piece of real estate, Apple stock, or in our context – bitcoin (or any other digital currency for that matter – like Litecoin), you have to keep track of the price you purchase/acquire it at, as well as the price you redeem/sell/dispose of it at.

Let’s do a quick exercise using bitcoin as an example. Let’s say you acquired or bought some bitcoin when 1 BTC was worth $150. You later then sold your bitcoin when 1 BTC was worth $200. If you had held your 1 bitcoin for less than 365 days when you sold it and it was worth $200, you would have a short-term realized gain of $50. If it had been more than 365 days you would have a long-term realized gain of $50. The reason we distinguish between short-term and long-term here is because in the United States, the IRS assigns a different tax-rate to people with short-term gains versus long-term gains.

So, we’ve established what a “realized” gain is. A “realized” loss is the same thing, except that you’ve redeemed/sold/disposed for a loss. If we reversed the above example, and you had acquired/purchased 1 BTC at $200, and then later sold it for $150. That would be a loss of $50. Pretty easy to understand, right?

Now the only part that remains is understanding what an “unrealized” gain or loss is. It’s super-easy! An unrealized gain or loss is simply what your current gain or loss is, as of this very moment in time (or any point in time,as long as you haven’t sold), compared to the price point you acquired/purchased at. It’s unrealized because you haven’t “realized” or “incurred” the actual gain or loss – you still hold the asset… you haven’t disposed, sold, or redeemed it yet.

Ok, so why is unrealized gain and/or loss reporting helpful to you? Well, due to potential tax consequences of having a gain or loss, it is helpful to know before hand what your “realized” gain or loss could be. If you only have a couple of transactions you probably already have an idea of it in your head, however, a lot of our users have a ton of bitcoin or digital asset related transactions because they are miners, professional traders, or do a lot of business based in digital currency. These people utilize various cost basis methods such as FIFO or LIFO so that they can compliantly minimize their realized gains or maximize their realized losses in order to minimize their tax liability when accounting for their transactions.

Unrealized gain and/or loss reporting is available now. To see what your unrealized gain or loss is, simply login to your account and click on “Reports” in the top navigation bar. You will then be able to see your unrealized gain or loss as of today for any open positions.

Have any questions? Problems? Any other data you’d like to see on your reports page? Please let us know! 🙂