The CFO Checklist for Crypto Tax Season
Tax season can be daunting for any finance team, but when crypto is involved, the complexities multiply. Between tracking transactions across wallets, calculating gains and losses, and ensuring compliance with evolving regulations, CFOs handling crypto need to be well-prepared. To help you navigate crypto tax season efficiently, we’ve put together a CFO checklist covering everything from data accuracy to tax reporting best practices.
1. Consolidate All Crypto Transactions
Unlike traditional financial assets, crypto transactions often span multiple wallets, exchanges, and chains. To ensure accurate tax reporting, finance teams should:
✅ Aggregate data from all sources – This includes on-chain wallets, custodial accounts, exchanges, and DeFi transactions.
✅ Identify all transaction types – Purchases, sales, swaps, staking rewards, airdrops, and expenses should be categorized correctly.
✅ Use automation where possible – Manual tracking increases the risk of errors, especially with high transaction volumes.
💡 Tip: Consider using a crypto-native accounting solution that integrates with your ERP to centralize transaction tracking and categorization.
2. Review Cost Basis & Gain/Loss Calculations
Crypto tax calculations require precise tracking of cost basis and disposal methods. Ensure your team:
✅ Chooses the correct cost basis method – In the U.S., FIFO (First In, First Out) is the default unless another method (e.g., LIFO, HIFO) is consistently applied. In Canada, the Adjusted Cost Basis (ACB) method must be used for capital gains calculations, requiring all acquisitions to be averaged into the cost basis.
✅ Tracks realized vs. unrealized gains – While unrealized gains are generally not taxable, they may impact financial statements depending on accounting treatment. For traders using mark-to-market accounting, unrealized gains may be taxable.
✅ Accounts for transaction fees correctly – Gas fees, trading fees, and protocol costs should be recorded accurately. In some cases, these fees may be deductible or increase the cost basis of acquired assets.
✅ Applies capital losses correctly – In the U.S., capital losses can offset capital gains and up to $3,000 of ordinary income per year. In Canada, capital losses can only offset capital gains but can be carried forward or back.
💡 Tip: If your organization operates in multiple jurisdictions, ensure consistency in tax reporting and compliance with local regulations.
3. Ensure Regulatory Compliance
Tax treatment for crypto assets varies widely by country and is constantly evolving. CFOs should:
✅ Stay updated on new tax rules – The IRS, OECD, and other regulatory bodies frequently revise guidelines for digital asset taxation. The U.S. is rolling out new broker reporting requirements in 2025, while other countries are updating guidance on staking and DeFi transactions.
✅ Ensure proper reporting of staking and DeFi income – In the U.S., staking rewards are generally taxed as ordinary income upon receipt, though legal challenges may alter this in the future. In Canada, staking rewards are typically taxable when received, but the classification as business income or capital gains depends on the taxpayer's activity.
✅ Prepare for potential audits – Proper documentation of historical transactions, pricing sources, and tax lot calculations is critical for compliance.
💡 Tip: The IRS has introduced new broker reporting rules under the Infrastructure Investment and Jobs Act, requiring exchanges and certain DeFi platforms to issue Form 1099-DA starting in 2025. While self-hosted wallets are not directly subject to this rule, businesses must maintain accurate wallet-level records for tax compliance.
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4. Reconcile Crypto Holdings with Financial Statements
To avoid discrepancies in financial reporting, finance teams should:
✅ Reconcile closing balances – Ensure crypto balances match across on-chain data, custodians, and your accounting software.
✅ Verify all transactions have been categorized correctly – Transfers between wallets owned by the same entity are not taxable but should be tracked to maintain accurate cost basis records.
✅ Account for impairment losses where applicable – Under current U.S. GAAP rules, crypto is classified as an intangible asset, meaning it must be tested for impairment. However, new FASB rules coming in 2025 will allow companies to report crypto holdings at fair value instead.
💡 Tip: Implement real-time reconciliation tools to catch mismatches before they cause end-of-year headaches.
5. Generate Tax & Compliance Reports
Once data is consolidated and reconciled, it’s time to generate audit-ready reports for tax filings and financial disclosures. Key reports include:
📌 Realized Gains & Losses Report – Breaks down capital gains for each taxable event.
📌 Cost Basis Report – Details tax lot tracking and cost basis calculations.
📌 Schedule of Dispositions – Provides records of taxable withdrawals, swaps, and fees for accurate tax accounting. Some DeFi transactions, such as liquidity provision and token wrapping, may create taxable events depending on jurisdiction.
📌 Closing Positions Report – Summarizes holdings, valuations, and unrealized gains.
💡 Tip: Work with your tax advisors early to ensure all reports align with your jurisdiction’s requirements.
6. Plan for Next Year’s Crypto Accounting Strategy
Rather than scrambling every tax season, proactive CFOs optimize their crypto accounting workflows ahead of time. Steps to take:
✅ Implement automation for transaction categorization and reconciliation.
✅ Establish clear tax policies for staking, DeFi, and NFT transactions.
✅ Review risk management strategies for tax compliance and audits.
✅ Ensure your ERP system can handle crypto-native financial data.
💡 Tip: If your team is still manually reconciling transactions or struggling with tax compliance, it’s time to explore automated solutions that streamline the process.
Final Thoughts: A Proactive Approach to Crypto Taxes
Tax season doesn't have to be overwhelming—the key is preparation. By consolidating data, reviewing tax calculations, staying compliant with evolving regulations, and implementing automation, CFOs can ensure accurate and stress-free crypto tax reporting.
For finance teams managing high transaction volumes across multiple chains, having the right tools and processes in place can save significant time and reduce audit risks.
🔎 Want to streamline your crypto accounting workflow? Learn more about automation-driven crypto accounting solutions that simplify reconciliation, cost basis tracking, and tax reporting.
