How to Manually Enter Loan and Liquidation Transactions in CoinTracker

In some cases, users may need to manually enter loan and liquidation transactions in CoinTracker, particularly when dealing with self-custody wallets and crypto-collateralized loans. This guide will walk you through the process of entering and modifying these transactions to ensure they are accurately represented in your CoinTracker account.

Creating A Separate Wallet to Represent Loan Vaults

To represent Loan Vaults you can create a new wallet by importing a CSV with a placeholder transaction. It should be formatted exactly like this:

Additional instructions for formatting a CSV to the correct format to create this wallet can be found here: Converting and importing transaction history CSVs with the CoinTracker CSV format

The CSV won't add any new transactions; it just has one placeholder row that won't be imported. It will simply create an empty wallet in your CoinTracker account to help identify the transactions if needed. To create an imported wallet with the CSV:

1. Navigate to Wallets > Add Wallet.

2. Type “Import” into the search and select “Import from CSV”.

3. For the wallet name, type in something that will easily identify which vault or location this represents.

Manually Editing Collateral Sent Transactions

When you send collateral for a loan, you intend to get that crypto back rather than actually disposing it at that time. You can edit the receiving side to show the collateral being Transferred to your wallet created in the previous step for loan values.

When you need to represent collateral returned to you, the Receive transaction can also be edited to show the collateral being Transferred back to you. Using the transfer type removes the gain/loss calculation.

Loan Liquidation

If you had collateral that was liquidated while in the vault, we don't currently represent that kind of activity with a transaction for most platforms, but you can add it manually.

To represent a full or partial liquidation, you can create a manual transaction that just shows a "send" for the amount liquidated, and you'll see the loss calculation on that transaction. The date of the transaction should be the date the liquidation happened. Make sure you set the sending wallet to the correct "vault" if you've created those using the spreadsheet I attached.

You can change the category of this transaction to 'Liquidation'.

Loan Funds Received

Please be aware that manual transactions don't currently affect balances in the same way that automatically synced transactions do, so you may not see the balance reduced if you're making a manual transaction to send collateral out, for example.

For transactions where you receive loan funds can be tagged using the Borrow tag and transactions where you pay back a loan can be tagged as Loan repayment. Please see this article for more information about crypto-collateralized loans and this article to review our tag definitions and tax impact. 

Fees

Please note that there may be additional fees associated with crypto-collateralized loan activity. Any fees that are not already represented on your transactions can be added as manual "send" transactions to reflect these additional disposals of crypto and be tagged as Interest expense to represent the payment towards the interest of a loan. 

Example Loan Liquidation Scenario

For the purpose of this guide, we'll use the following example:

1. A user sends 10 ETH to a vault as collateral.
2. Crypto prices drop, and 6 ETH is liquidated, resulting in a complete loss of that amount for the user.
3. The user receives back the remaining 4 ETH that was not liquidated.

This example does not include any fees, penalties, or other charges you might encounter. You may need to add these manually to your transactions

Step 1: Create a Wallet Representing the Vault

First, the user created a new wallet to represent the vault where they sent their crypto using the instructions in an earlier sub-section Creating A Separate Wallet to Represent Loan Vaults. Then, they imported the CSV to CoinTracker and named it "ETH Vault".

Now they have an empty wallet to assign "Other Transactions" to.

Step 2: Send Transaction to the Vault

Next, they account for the 10 wstETH sent to the vault.

If this transaction appears automatically as a taxable "send," edit the "receive" side and change the receiving wallet to the appropriate vault, in this case the empty wallet called "ETH Vault". If this transaction is not in CoinTracker, it will need to be added manually.

Step 3: Receive Transaction from the Vault

Find the "Receive" transaction (or create the transaction if it doesn't exist) where they received the remaining 4 wstETH from the vault after liquidation. This should also be also be edited to show the sending wallet as the appropriate vault, in this case "ETH Vault".

Step 4: Account for the Liquidated Crypto

Finally, they'll need to account for the 6 wstETH that was liquidated and did not come back to them. They'll create a new transaction representing the disposal of the liquidated amount and add the amount of 6 ETH. The date of this transaction should be the actual date of the liquidation.

This is the only transaction in this sequence that will have a gain/loss calculation.

NOTE: If you have to recreate transactions that were automatically synced, don't forget to mark as "Ignore" on the automatically synced ones to avoid duplicates.