# Robinhood, daily buying and selling, and cryptocurrencies... What tax concepts to expect?

Robinhood has plenty of docs explaining the tax concepts with trading, and this is not particularly mysterious. But what I am wondering is what sort of documents to expect them to provide come tax time, and how that might vary by your behavior in the market.

Consider this totally improbable scenario-

Suppose you have \$1000 to invest in some crypto. Suppose you watch one that has a reasonably consistent rise and fall pattern. Suppose every day you sold more or less at a high, and gained an average of 5% per day. Then you buy \$1000 worth again at midnight and do the whole thing over again next day.

So your history would look something like this:

• -\$1000 initial investment
• +\$1050 sale
• -\$1000 today investment
• +\$1050 sale
• -\$1000 today investment
• +\$1050 sale

Assuming you dumped that surplus \$50 back into your actual bank account each day, in theory you would end up owing whatever the tax rate is for the \$150 in gains that is currently in the bank. Now, imagine this behavior every day for the whole year.

What I want to know is how do I know that I am going to have the cost/gains report in a comprehensible source? Even if I have to compile it myself, I am yet uncertain if robinhood will provide some kind of document that allows me to separate and calculate this myself. I am pretty sure the pattern above would result in a 1099 saying they paid me \$3150 and obviously I would be digging my own grave if I proceeded to pay taxes on that figure without factoring what I paid into it.

So, is it up to me to keep careful records of how much I put in, and how that money was realized (gain/loss) or will there be something at least a little closer to a "how much you put in" and "how much you put out" ...

• in: \$3000
• out: \$3150
• gain/loss: +\$150

This situation is fictional, of course. So we don't need to discuss the probability of the situation, only the outcome. If I expect to buy and sell crypto daily, how meticulous do I have to be with my own book keeping? Or does anyone know what you get from Robinhood, and whether or not the documents they give you are straight forward enough for the standard human to read?

Thanks

• I recently learned about the Wash Sale Rule. Its not an answer to your question, but from the phrasing, its something you may want to make sure you understand. From what I understand, failing to understand it can lead to painful consequences, such as having a tax bill orders of magnitude greater than the gains from the security being traded. Commented May 5, 2021 at 18:46
• the wash sale rule only disallows arbitrary loss harvesting. There is no application in this situation when there are only gains. Also, it wouldn't result a great deal more tax when taking some losses. If you're trading the same security and you can't deduct temporary losses, those losses are still factored in to your cost basis in the next trade. You don't just lose them. investopedia.com/terms/w/washsalerule.asp Commented May 5, 2021 at 22:48