



As promised on Thursday, I’m doing my first ever product review today.



You might recall that Libra Tax, the SF-based bitcoin startup backed by CrossCoin Ventures,



Given the massive appreciation of bitcoin in 2013, I think others should realize similar savings. Here’s what you can expect from the product (still in private beta).



[Insert legal disclaimer about this not being financial or legal tax advice. i.e. Don’t be an idiot and consult this post rather than an “qualified” expert. I may know more about bitcoin tax than 99% of CPAs, but the government doesn’t care.]



It’s relatively straightforward to get started with Libra. After you go through the account creation and verification process, you’ll come to the Libra dashboard, which consists primarily of a clean, blank table which prompts you to import or manually input your various digital currency transactions into the system. (I say digital currency because Libra is built to ultimately accommodate various currencies like ripple and other alt-currencies.) You have the option to connect a Coinbase account, upload a csv file with transaction history from any wallet or manually import data from specific bitcoin addresses. Libra will actually scour the block chain to pull relevant data for a given address’s 500 most recent transactions. In that regard, the tool seems comprehensive.



I tested the Coinbase API several times, and each time Libra was able to pull transaction data quickly and correctly, with negligible bugs in the user flow (e.g. I was taken to an error screen a couple of times when in fact the import completed). For those of you without Coinbase accounts, I also tested the csv uploads and wallet address imports. Both worked as advertised. More importantly, it was easy to add and remove linked accounts and wallets via Libra’s “manage addresses” option. So I didn’t worry about double counting transactions from multiple sources. So far so good.

Roger Ver gets 20k retweets to support Ross Ulbricht and his legal fund. CoinDesk unveiled its list of its top eight heroes and villains of the year so far, and it’s a sham I didn’t make at least one of them. European banking regulators tell people to stay away from bitcoin during the BitFin conference that educates hundreds of finance pros. And breaking news is that ISIS just wrote a blog post embracing bitcoin…more on that tomorrow. Until then, let’s kick the holiday hangover with a product review that could save you a ton of time and money.As promised on Thursday, I’m doing my first ever product review today.You might recall that Libra Tax, the SF-based bitcoin startup backed by CrossCoin Ventures, announced itself to the world shortly following the IRS’s ruling on bitcoin’s taxability (a topic I covered in detail for Investopedia and in brief on the blog). Libra promised that its beta would be available in time for bitcoiners to file their taxes before the September extension deadline, and it appears to be on schedule. I took the company’s beta product for a test drive this past weekend, and using Libra’s beta product helped me organize the sub-accounting of my trading history through Coinbase in such a way that I now have documentation which will save me over $1,000 in tax liabilities from 2013. (Not a typo.)Given the massive appreciation of bitcoin in 2013, I think others should realize similar savings. Here’s what you can expect from the product (still in private beta).[Insert legal disclaimer about this not being financial or legal tax advice. i.e. Don’t be an idiot and consult this post rather than an “qualified” expert. I may know more about bitcoin tax than 99% of CPAs, but the government doesn’t care.]It’s relatively straightforward to get started with Libra. After you go through the account creation and verification process, you’ll come to the Libra dashboard, which consists primarily of a clean, blank table which prompts you to import or manually input your various digital currency transactions into the system. (I say digital currency because Libra is built to ultimately accommodate various currencies like ripple and other alt-currencies.) You have the option to connect a Coinbase account, upload a csv file with transaction history from any wallet or manually import data from specific bitcoin addresses. Libra will actually scour the block chain to pull relevant data for a given address’s 500 most recent transactions. In that regard, the tool seems comprehensive.I tested the Coinbase API several times, and each time Libra was able to pull transaction data quickly and correctly, with negligible bugs in the user flow (e.g. I was taken to an error screen a couple of times when in fact the import completed). For those of you without Coinbase accounts, I also tested the csv uploads and wallet address imports. Both worked as advertised. More importantly, it was easy to add and remove linked accounts and wallets via Libra’s “manage addresses” option. So I didn’t worry about double counting transactions from multiple sources. So far so good.



Libra looks at the date, destination, amount transacted, exchange rate, type of currency (BTC, XRP, etc.), and the taxable event, along with the description you gave to the transaction, which helps you flag any required manual edits. Then it pulls your cost basis from Coinbase for each transaction or, in instances where you used another wallet, the relevant 24-hour weighted average exchange rate at the specified time (marked with an “M” in the upper left corners). Additional integrations are planned in the coming months prior to the September filing deadline, but the Libra exchange rate estimate is a good worst case option for those who don’t use one of the larger wallet services.



These “good-faith” estimates of fair-market values will likely be good enough for casual traders, although Libra’s CEO Jake Benson cautioned that the free beta tool is strictly for educational purposes. He admitted that the company needs to make additional investments in tools that help active traders - who may trade at multiple prices every single day - tackle their more granular cost basis reporting. In the meantime, the Coinbase data and csv imports pull cleanly.



The software also makes it easy to edit specific transactions manually. So if one of your inflows was a gift or income and not a purchase, or one of your outflows was a gift or a donation and not a sale, you can note that and realize the appropriate tax treatment for each in the process. This is where the description box comes in handy today. In the future, you should be able to specify what type of transaction you are making at the actual time you send or receive bitcoins rather than marking them up months later through Libra.



But it is only after you review your transaction history that the real magic happens.



You have the option to calculate gains and losses according to one of four methods: FIFO, LIFO, Average Cost, and the “LibraTax Optimized” - a form of “specific identification” tax reporting which allows the user to choose which specific “lots” of bitcoins he wishes to sell during a sale. In theory, you would like to minimize your taxable gains by selling the bitcoins you have purchased with the highest cost basis, and Libra automates that process for you.

