A Layer 2 is a network built on top of a base blockchain (Arbitrum, Optimism, Base, Lightning) to process transactions faster and cheaper, settling back to the base chain.
Moving assets to a Layer 2 usually involves a bridge, and the tax question is whether you received the same asset or a different one. Activity on the Layer 2 is taxed the same as on the base chain, and analytics cover it the same way.
Layer 2 activity is where crypto tax software loses track of basis most often, because it treats the bridged asset as newly acquired. Bridging.
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