The best tool that you can use is a tracker or aggregator such as Coinbase, but there are several others online as well. This will allow you to keep track of your cost basis whenever you buy, sell, or trade your cryptocurrencies. A good tracker will work across multiple platforms.
Often times, due to the large number of transaction and fractions of coins in each one, trying to track basis at the end of the year is a nightmare. By using a tracker, basis is kept in real time with each transaction.
The reason that basis information is needed, is so that you only pay tax on the amount of gain that you realize whenever you sell or trade your cryptocurrency, rather than the entire amount.
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