Trying to report your PancakeSwap taxes to the IRS?
Because decentralized exchanges don’t provide tax forms to users, trying to collect the information you need to file your tax return can be a struggle.
In this guide, we’ll break down everything you need to know about PancakeSwap tax reporting. We’ll discuss how different PancakeSwap transactions are taxed and share a simple 3-step process to help you file your PancakeSwap taxes in minutes.
PancakeSwap is a decentralized exchange built on the Binance Smart Chain (BSC). PancakeSwap leverages BSC to offer low transaction fees to users.
On PancakeSwap, users can swap BEP20 tokens, add trading liquidity, and receive staking rewards. In September 2021, it was estimated that the protocol had more than 2.8 million active users.
In the United States, cryptocurrency is subject to ordinary income and capital gains tax.
For more information, check out our complete guide to cryptocurrency taxes.
In general, crypto-to-crypto trades are considered a disposal. You’ll incur a capital gain or loss depending on how the price of the cryptocurrency you’re trading away has changed since you originally received it.
The IRS has not released guidance on how adding/removing liquidity to DeFi protocols like PancakeSwap is taxed.
The conservative approach is to treat adding/removing liquidity as a taxable crypto-to-crypto swap. With this approach, you would incur a capital gain or loss depending on how the price of the crypto you’re swapping has changed since you originally received it.
A more aggressive approach is to treat adding/removing liquidity as a non-taxable deposit/withdrawal.
For more information, check out our complete guide to DeFi taxes.
Staking rewards are considered ordinary income based on their fair market value upon receipt. For more information, check out our complete guide to staking taxes.
At this time, DeFi protocols like PancakeSwap are not required to report to the IRS.
Still, it’s important to remember that all transactions on PancakeSwap are publicly viewable on the Binance Smart Chain. In the past, the IRS has partnered with contractors like Chainalysis to analyze the blockchain and track cryptocurrency transactions.
Most decentralized exchanges do not send tax forms to users. Because transferring crypto from wallet to wallet is so common, exchanges don’t have access to information on cost basis that’s needed to calculate your capital gains.
Unfortunately, tracking your cryptocurrency taxes on your own can be difficult. To accurately file your taxes, you’ll need to have complete information on each of your cryptocurrency disposals — including your cost basis, gross proceeds, and the date of receipt and disposal. Collecting this information can take hours of time and effort.
Luckily, there’s an easier way. Cryptocurrency tax software like CoinLedger can help you generate a complete tax report in minutes. Simply connect your wallets and exchanges, and CoinLedger can calculate your capital gains and income.
Here’s how you can report your PancakeSwap taxes on CoinLedger in 3 simple steps.
And that’s it! Once you’ve connected your other wallets and exchanges, you’ll be able to generate comprehensive cryptocurrency capital gains and ordinary income tax reports with the click of a button.
Don’t rely on a spreadsheet to keep track of your cryptocurrency transactions. Get started with CoinLedger, the platform trusted by more than 300,000 investors across the globe.
Get started with a free preview report — there’s no need to enter your credit card details until you’re 100% sure your information is accurate.