When reconciling your transactions, you may encounter issues related to the cost basis of your transactions. It's important to understand that the cost basis of your transactions cannot be directly edited. This article will guide you through the steps to ensure your transaction history is accurate and how to address issues related to cost basis.
Why Can't I Edit the Cost Basis?
The cost basis is a critical component of your calculations and is automatically derived from your transaction history. Allowing direct edits could lead to inaccuracies and compliance issues. Instead, you should focus on ensuring that your transaction data is complete and accurate.
How Crypto Tax Calculator Determines Cost Basis
The cost basis calculation in CTC relies on all transactions imported into the platform. The accuracy of this calculation depends on your selected inventory method and cost basis tracking settings. Here's how it works:
1. Transactions Import
CTC aggregates all your transaction data from imported exchanges and wallets. This comprehensive data forms the foundation of the cost basis calculation.
2. Inventory Method
The inventory method you select (e.g., First In First Out, Last In First Out, Most Tax Effective, etc) significantly impacts how your cost basis is calculated. Each method has different rules for which units are sold first. You can check and change your inventory method on your Settings and Reports page.
3. Cost Basis Tracking Settings
Your settings for cost basis tracking determine how the transactions are processed and calculated.
Universal - The cost basis will be tracked universally across all wallets and exchanges.
By wallet and exchange - The cost basis is tracked by wallet and exchange. This means that there may be multiple cost bases for an asset based on the purchase price where the asset was purchased.
Steps to Resolve Cost Basis Issues
1. Ensure all exchanges and wallets are imported
Make sure you have imported all transactions from all your exchanges and wallets. Missing transactions can result in missing purchase history and inaccurate cost basis calculations.
Guides on how to import your wallets and exchanges
Guide on how to solve missing purchase history issues
2. Categorize your transactions correctly
Proper categorization of transactions is crucial. Each transaction should be classified correctly (e.g., buys, sells, transfers).
Incorrect or incomplete categorization can result in a zero-cost buy ($0 cost basis) or other inaccuracies. Please review your transactions to ensure they are correctly categorized. You can filter for 'warning: requires categorization' in your Transactions tab to see the list of transactions that still need to be categorized. If you are on a paid plan, you can easily see the uncategorized transactions in the Review tab.
Guide on the different categories
How to Categorize Transactions by Checking Blockchain Explorers
3. Manually add the missing purchase history
If you've done steps 1 and 2 correctly but the cost basis is still missing (i.e., you still see zero-cost buy or get a missing purchase history warning), you can manually add the missing 'buy' or acquisition transaction using the 'Add Transaction' button on the Transactions page. Please refer to this guide for details: How to Manually Add a Transaction.
You may also do this on the Ledger page by clicking '+Create transaction before'.
Important note:
This option only works if you are using the First In First Out inventory method.
If in doubt when using this option, please check with your accountants.
If you follow these steps, you'll easily resolve most issues related to the cost basis of your transactions. Ensuring you import all your exchanges and wallets and correctly categorize your transactions is essential for keeping accurate records. If needed, manually adding any missing transactions can fill in the gaps and set the correct cost basis for your assets.
Still need a hand? Just message our Support team via the in-app messenger.