CoinTracker calculates the cost basis for NFT transactions using recognized cryptocurrencies like ETH or MATIC. However, in some cases, it may not be able to determine the cost basis or price, triggering a missing price history notification.
What to do if CoinTracker can't determine NFT cost basis
When trading NFTs or receiving them via airdrops without payment, you'll need to manually determine the NFT's value. This requires using the market approach similar to real estate valuation. Here are the steps and considerations for this method:
- Timing: Calculate the cost basis and income based on when you received the NFT, not when you update your records.
- Comparability: Consider similar NFTs within the same or similar collections.
- Reliability: One marketplace could be significantly higher than another. Make sure the source you’re using is reliable.
- Availability: Sometimes this information isn’t readily available or hard to find. Use blockchain data (Etherscan), NFT marketplaces (like OpenSea, Magic Eden, Blur, or X2Y2), or other sources (like LooksRare) to get the information you need.
Examples: Estimating NFT value and cost basis manually
Scenario 1: John is whitelisted for an NFT launch and receives the NFT for free. At the time, the public mint price was 0.05 ETH which is equivalent to $80 USD.
- Using the market approach: John reports $80 USD as income and sets his cost basis at $80 USD. If he sells the NFT the next day for $100 USD, he realizes a gain of $20 USD.
- Without the market approach: John sets his cost basis to $0 USD. Selling the NFT for $100 USD results in a gain of $100 USD.
Scenario 2: Jane receives a CryptoPunk as part of her compensation. She can establish her income and cost basis by comparing sales of similar CryptoPunks around the time she received it.
Note: Tax treatment of NFT income, gains, and cost basis depends on your county’s tax laws. Check local regulations or speak with a tax advisor to ensure accurate reporting.
Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional. Please see our full disclaimer.