When reviewing your transactions, you often look for outliers - transactions with very high gains. These gains may look wrong or implausible.
This article explains what to check when assessing such transactions.
How is the capital gain calculated
Capital gain is calculated by deducting the cost basis from the current worth of the disposed assed:
capital_gain = worth - cost_basis
Worth - The fair market value of the asset at the time of transaction
Cost basis - The cost of acquisition; the price paid for the asset being disposed
If the cost basis is lower than the worth, trade results in a capital gain. If the cost basis is higher than worth, the trade results in a capital loss.
How to check if the gain is correct
The calculated gain can be incorrect only if one of the variables used to calculate it is incorrect. Check the worth and cost basis on the trade:
1️⃣ Check the worth
We calculate the worth (fair market value) of the asset based on market price aggregators like CoinMarketCap and CoinGecko - see How Koinly sets the market price for your transactions.
Market worth set by Koinly can be incorrect if:
Market price is missing
Asset's price is unknown (assumed $0)
Market price is inaccurate
May happen if the asset was extremely volatile at the time
ℹ️ Modify the worth of the transaction
If the worth set by Koinly is inaccurate, you can modify it - click on the current market value (on the right side of the transaction) and set the new value in the popup
2️⃣ Check the cost basis
Cost basis is calculated automatically based on previous transactions and cannot be modified. Cost basis being wrong usually indicates that your transaction history - activity leading to the trade with the wrong cost basis - is wrong/incomplete.
To assess if the cost basis shown on the transaction is correct, see: