Lukka, a cryptocurrency accounting firm, has debuted a DIY crypto tax preparation tool for retail investors. According to a press release published earlier today, the firm explained that the tool, which is called LukkaTax, is an updated version of LibraTax, a crypto tax calculator that was built and deployed back in 2014.
Lukka debuts DIY crypto tax prep product https://t.co/j2ItD6JKvR
— Accounting Today (@AccountingToday) December 19, 2019
Increasing Crypto Tax Clarity Forced a Pivot
Since its inception, Lukka has been working on providing institutional-grade solutions for crypto investors and funds. However, while it has focused its accounting services on meeting the needs of institutional investors all this while, the firm expressed that the evolution of cryptocurrency tax accounting to made it cover retail investors as well, and it has seen no reason why it shouldn’t expand its services to meet their needs as well.
Speaking with news medium Cointelegraph, company chief executive Jake Benson explained that their move to retail investors was significantly spurred by the fact that the Internal Revenue Service has now provided clear instructions for how taxpayers should remit their gains on cryptocurrency investments as well.
He added, “There is a new question that appears first on the IRS schedule 1 tax form that asks, ‘do you have any transactions in virtual currencies for this year?’”
Benson pointed out that this year will be the first time that the IRS will make explicit requests to taxpayers to keep records of their crypto trading activities, pointing out tit shows significant progress in the classification of cryptocurrencies in the American financial ecosystem.
“Six years ago, taxpayers had to report gains and losses for any asset, but this has largely been avoided, as it was never explicitly stated. This year, the question is specifically mentioned first on a major tax form,” explained Benson.
His company is simply helping people to fulfill their tax obligations. Now, retail investors will be able to submit their transaction records directly from their crypto exchange accounts to the online accounts they open on the company’s website. Lukka’s software will proceed to reconcile the transaction data gotten, and calculate the investors’ expected tax obligations and submit them to the IRS.
Lukka Tax for Professionals
Benson added that Lukka has partnered with CPA.com, a subsidiary of the American Institute of Certified Public Accountants, to launch Lukka Tax for Professionals, an initiative that will provide crypto tax preparation services to accounting firms.
The announcement was made public in a December 9 press release from the Institute, where it explained that since a growing portion of American investors now trade and transact in cryptocurrencies, it will be important for them to know how to declare their assets and file their tax reports.
The announcement also explained that the tool’s browser dashboard would allow professionals to easily make updates across several clients and upload files to reduce mapping times and the risk of manipulation.
Benson further explained that this partnership would play a significant role in crypto tax remittance, adding that the Institute only selects one partner in industry to provide accounting best practices.