Thank you! That single integer "1099" clarified the whole thing for me! Of bloody course Coinbase is providing a service just like, say, Schwab does for stock accounts. And part of that service ought to be a nice, neat, verifiable year-end statement, "trading through us this year, you made/lost $X in taxable capital gains."

My 1099s from several Schwab accounts are the basis for much of my tax return each year and I am quite grateful for the way Schwab abstracts so much complicated accounting into a single statement that both I and the IRS can trust without question.

Is there a BTC exchange that DOES provide 1099-type statements?

How would Coinbase know the cost basis of coins transferred in?

Why would Coinbase issue 1099s? And on what basis? Keep in mind it holds custodian funds in a wallet service, like a bank account. If I deposit 1 BTC when it is worth $5,000, does Coinbase report that as $5,000 of income on my 1099? I hope not! What if I withdraw that same 1 BTC when it is worth $16,500, should Coinbase tell the IRS I made $11,500 in gains? But I didn't sell anything! I just moved something I already owned from one place to another. That's not a taxable event.

If I use my bank to transfer you money, the bank isn't responsible for filing a 1099 to report that income to you; I am. Using coinbase to transfer funds to you should be handled the same, and Coinbase is a wallet and merchant service as much as it is an exchange.

Now selling coins is always a taxable event. But when properly using an exchange, the coins should not be kept "on account." So ideally, every bitcoin sold was transferred into Coinbase/GDAX prior to the sale. How does Coinbase know the cost basis to report? It doesn't. Not unless that information is freely provided by the user, in which case it is fully unverifiable and the user would be free to put whatever the heck they want. Should Coinbase be required to file 100% self-reported tax information from its users without any way to verify the authenticity of that reported cost basis and time held?