> How do you actually go about doing that accounting practically given the volatility and the number of transactions?

It's basically the same as with stocks. Work out the equivalent USD value for every trade, and subtract the cost basis to figure out how much capital gains/loss you have on that trade. If valuation is hard (you're trading 5 shitcoins for 1 altcoins), figure out a method you can justify with a straight face and taxman will generally be happy (this, incidentally, is why auditing rich people is difficult).