I imagine a managed wallet like Coinbase would really help here. They could easily create a report on exactly how much you owe in capital gains. Managing this yourself could get a bit messy.
Funds from Coinbase should be evacuated to your own secure cold storage wallet immediately after you purchase them. You should never hold a balance higher than 0BTC for any length of time on Coinbase. Follow this advice and you'll have your money forever. Don't follow it and you'll lose your money the moment Coinbase suffers any serious theft, a technical disaster, a rogue employee, or the founder steals coins.
(I speak from experience, having lost a massive amount of money when Mt. Gox went under for one of the above reasons, which I probably won't get back.)
There are plenty of techniques for keeping your coins safe. Just find one and use it. I've heard Armory is pretty good.
Coinbase is far more dangerous in comparison, because they can go under at any time for any reason. Human greed is a thing. Always remember that Coinbase has to rely on some employees to implement their systems, and those same employees can write some code to steal money from their systems.
If the average user can figure out how to use bitcoin, then they can figure out how to use Armory. Most people have an old laptop or computer that they can afford to keep disconnected from the internet. If it's not connected to the internet, then it's not susceptible to hacks. It also offers a way of doing secure backups, so that if your computer is lost in a house fire, you'll still have your coins.
Even if they don't have an old computer, spending $100 on one off of Ebay or whatever is possibly the best insurance payment they could make, because it's just a matter of time until any bitcoin exchange dies. Not only do you have yourself to worry about, but if you have children then you'll want them to inherit your wealth. Hard to do if your wealth vanishes because your preferred exchange went under.
Or less susceptible, anyway... didn't Stuxnet hitch a ride on a thumb drive?
I don't agree. Using coinbase is vastly easier than setting up Armory and managing your own security on your own PC.
> Most people have an old laptop or computer that they can afford to keep disconnected from the internet.
They won't understand they need to; they can't even stop opening exe attachments in their email and running them, you seriously overestimate the average user.
> If it's not connected to the internet, then it's not susceptible to hacks.
Way over their head.
> It also offers a way of doing secure backups, so that if your computer is lost in a house fire, you'll still have your coins.
Doesn't matter, you lost them at the word "install".
Coinbase is probably better secured than that, but I wouldn't trust any Bitcoin bank at this point. Personal computers are bad too because of malware, but I'd say the average consumer would be considerably safer with a safe.
Another question is, how can I figure it out?
Back when software mining was profitable and difficulty levels were high 2 or low 3 digits, I just let the thing free run for months as a "nice"-d process. So I'm not even sure when I mined them, other than "a long time ago" and then got rid of them late last summer/fall.
I think you are allowed to average, but this might not be beneficial with big swings.