Cryptocurrency and Virtual Currency Accounting
Real Estate and Construction Accounting
Hi Saim, lately I’ve been involved in yield farming and have no idea to track my income. Is there any way to go about this?
In most instances, tracking DeFi investments in various protocols can be very difficult to track due to the lack of visibility on the distributive ledger. The problem with these protocols is that lack of control of earned tokens/assets until they are “claimed” which is when the investor receives full control. The IRS states that income earned is to be recognized as soon as you have received it. A lot of these investments are to be viewed on a case by case basis.
You’ll need to use the same process you use for crypto reconciliation/accounting when you’ve invested in DeFi protocols. You’ll want to connect all wallets to a central repository to calculate your profit and loss. You must keep track of all your cost basis of each particular crypto transaction lot.
DeFi protocols are tough, so it’s really best to have a crypto accountant review them.
© Saim Akif, 2021