CoinTracker's accounting engine will automatically try to balance the outgoing and incoming assets of transactions, to improve overall accuracy. Below are a few examples of how this happens:
- Erica trades 5 BTC for 20 ETH
- The cost basis of the ETH is based on the Fair Market Value (FMV) of ETH on the day of the transaction
- The proceeds (or "amount realized") of the 5 BTC are also based on the Fair Market Value (FMV) on the day of the transaction
- This way, the outgoing and incoming sides of the transactions are balanced
- Alex trades 22,000 USDC for 1 BTC and 2 "XYZ" tokens
- The BTC price at the time of the trade is $20,000, but the "XYZ" token's price is unknown
- We will establish BTC's cost basis to be $20,000
- Even though we don't know the price of "XYZ" we will assign the cost basis of $2,000. This is the difference between the value of 22,000 USDC ($22,000) and the 1 BTC
In example 2, CoinTracker could use the prices of the two other assets to inform the price of the "XYZ" token.
However, in the rare case where CoinTracker has nothing to help inform the price of an asset, we will surface an error message like the one below:
In the example above:
- CoinTracker is not confident in the Fair Market Value of FDT on Jan 6, 2023
- So we're pegging the cost basis of FDT to the Fair Market Value of the disposed asset instead (Bitcoin), as we have reliable pricing for Bitcoin
- To resolve this error users can manually edit the cost basis or proceeds to confirm the correct value (see this guide for more details)
Disclaimer: this post is informational only and is not meant as tax advice. For tax advice, please speak with a tax professional.See our full disclaimer by clicking here.