A zero-cost buy occurs when you sell more assets than you've purchased. Since CTC can’t find a purchase record for the sale, it assigns a $0 cost to the missing asset, which leads to a zero-cost buy. This results in an incorrect balance and inflated gains, as the sale is treated as if the asset was bought for $0, increasing your capital gains.
How to Resolve a Zero-Cost Buy
To resolve a zero-cost buy, please check the Solving Missing Purchase History Issues guide. That article will help you resolve the missing purchase history issues that lead to zero-cost buys.
Common Reasons for Having a Zero-Cost Buy
Here are some of the common reasons why you can have a zero-cost buy:
Reason | Explanation |
Missing Data | You haven’t imported all your data yet. This is a crucial step to avoid balance and gains issues. |
If using ‘By Wallet and Exchange’ cost basis tracking, ‘Send’ and ‘Receive’ transactions must group into a ‘Transfer’ to properly transfer the cost basis. Learn more here. | |
The cost basis of uncategorized transactions is not taken into account. For example, if an 'Incoming' transaction is left uncategorized when it should be marked as a 'Buy', CTC won’t apply the 'Buy' calculation to it. As a result, it won’t be factored into the cost basis for future sales. | |
Incorrectly Categorized Transactions | For example, categorizing an ‘Airdrop’ as 'Receive' instead of the correct category can result in a zero-cost buy. |
Example Zero-Cost Buy Scenario
Let’s walk through a simple scenario where a missing ‘buy’ transaction leads to a zero-cost buy.
Date | Action | Transaction Details |
Jan 1, 2022 | Fiat Deposit | $5,000 AUD deposit to Coinbase |
Jan 1, 2022 | Buy | 1 BTC on Coinbase for $5,000 |
Feb 2, 2022 | Transfer | 1 BTC from Coinbase to Binance |
March 3, 2023 | Sell | 1 BTC on Binance for $8,000 |
Example of a Zero-Cost Buy
You imported your Binance data but did not import your Coinbase data. Below is an example of how the transactions would appear in CTC without the Coinbase import.
Since you only imported your Binance transactions, the 1 BTC purchase on Coinbase is missing. This resulted in a zero-cost buy and inflated capital gains when 1 BTC was sold in Binance.
Tip: A ‘Receive’ transaction does not increase the overall balance because it’s only a transfer between your own accounts. Learn more here.
How Importing the Missing Data Resolves the Zero-Cost Buy
Here's how the transactions would look after importing the missing Coinbase purchase:
By importing the missing Coinbase data, you’ve imported the purchase of 1 BTC and the other missing transactions. This updates your overall balance to reflect the 1 BTC purchase. As a result, when you sold 1 BTC on Binance, CTC correctly matched the sale with the corresponding purchase. This resolves the zero-cost buy issue by assigning the correct cost basis, which results in accurate capital gains.
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