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PaperclipPerfector  1mo ago (text post)   2904 thread views

Small-Scale Question Sunday for October 12, 2025

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

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I bought some ethereum and bitcoin on Coinbase back when I was a teen (before either they or I kept good records), and still have it on the exchange now. I believe there is absolutely no shot of nailing down an estimate to even the year's granularity of the purchase date, so I can't just retroactively fudge the basis, either.

Is just donating it as-is to charity the cleanest way to wash my hands of this ambiguously-basis'd balance, or is that likely to somehow be even worse than just biting the bullet of a "$0.00 basis" plea?

Considering the possibility that no custodial exchange will keep my crypto unbreached all the way up through my death, just leaving it in there and banking on the free death basis step-up is a bad option, I'd think.

Wait a second. Doesn't Bitcoin have a record of every transaction ever? Couldn't you just look at the blockchain to see when you got your coins?

No, because the exchange probably didn't produce any on-chain transaction to handle my purchase orders; and even if they had, my purchase was probably batched in with thousands of others and didn't have any on-chain data indicating how much of the raw acquisition was attributable to me.

The coins were bought off-chain, on an exchange.

In the bitcoin economy as it actually exists, most transactions between people happen off-chain (across the books of an exchange, or in the Lightning Network), and most on-chain transactions are people moving money from one hand to another (exchange deposits and withdrawals, opening and closing Lightning channels, transfers to and from cold wallets).

The easiest way to think about it is that Bitcoin replaces gold bullion, not money. Moving bullion out of the vault it is stored in is exceptional - most transactions happen by exchange of warehouse receipts.

Bitcoin went up 500x in the last ten years. Are you worried about getting taxed on 100% of its value instead of (the right and proper) 99.8%, or am I missing something about how it works?

I'd gladly accept a pile of crypto and give you whatever reimbursement doesn't cause you tax concerns.

I will jump in on the “I’ll take this problem off your hands” idea.

Is your concern here just taxes? If so just sell it and make a reasonable guess as to the basis, file the taxes, stick the money in an investment account, and give it a year or two to see if the agency wants their money. Or just do the zero basis thing and pay full taxes. Either option results in you coming out better than nothing.

If it was long enough ago that you can't even estimate the year, a $0.00 basis is going to be pretty close to accurate anyway. Charity is a good approach if you don't want to deal with it and do want to make similarly-sized charitable contributions though.

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