Buying crypto with Fiat
This is rather straightforward. In order to calculate cost basis of a received crypto asset, we look at the fair market value of the amount being paid (the “outgoing” column) at the moment of the transaction.
So for example, if you are paying $1,000 for 1 BTC, then the cost basis is $1,000.
- Any fees paid for the transaction will be included in the cost basis, as well. So if you paid $1,000 for 1 BTC and also a $25 fee, the cost basis of that 1 BTC will be $1,025
Crypto traded for crypto
Transactions where crypto is traded for crypto are a little trickier, given pricing volatility in crypto markets. That’s why CoinTracker's accounting engine will automatically try to balance the outgoing and incoming assets of transactions, to improve overall accuracy.
- 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) of the ETH on the day of the transaction
- This way, the outgoing and incoming sides of the transactions are balanced.
Cost Basis Settings
Users outside the US have the option to track cost basis universally or per wallet from the settings. Due to upcoming IRS regulations, only the per wallet option is available to US users. See here for more information.