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How to troubleshoot cost basis calculations
How to troubleshoot cost basis calculations

How to accurately assess whether your calculated cost basis is correct.

Jack avatar
Written by Jack
Updated over a month ago

If you think that cost basis shown on one of your disposals looks wrong, it's good to check how Koinly calculated it. This article explains what steps to take to accurately assess if cost basis calculated by Koinly is correct or not.

🚨 If your imported data is inaccurate, your calculations will be as well.
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There's usually no point in analyzing specific transactions if you have outstanding warning/issues in your account. For a complete step-by-step flow to fix your imported data, see:

👉 How to ensure your Tax Report is accurate

How should my cost basis be calculated?

In order to check if cost basis is correct, you need to know how it should be calculated - this, in turn, depends on your country's regulations.

  1. 🌍 Review our country-specific tax guides

    • Which cost basis method should be used?

    • Are there any special rules that need to be applied (e.g. wash sales)
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  2. 🔢 Review general rules for how to calculate crypto taxes
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  3. 🧑‍💼 Consult with your tax advisor or reach out to your tax office if unsure

How is Koinly calculating my cost basis?

Once you know how cost basis should be calculated, check if your Settings in Koinly are aligned with this. If they aren't - consider changing them. The most important settings to look at are:

  1. 🧮 Cost basis method

  2. 🔁 Gains on crypto-crypto

  3. 💧 Gains on LPing

  4. 🫧 Cost tracking

☝️ All settings affect your calculations

Check our articles in the Portfolio settings section for a detailed description of what each setting/toggle does. The list above contains settings that are the most common reason for debating Koinly's calculations, but all settings affect the cost basis

Troubleshooting a specific transaction

Once you know by which rules cost basis is calculated, you can review your transactions to confirm what might be causing issues. This usually requires following the "trail" of transactions (trades, transfers) that lead to the disposal you want to analyze.

In order to understand which transactions affected the calculation of cost basis:

  1. 🔍 Find the transaction on the "Transactions" page
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  2. 🔬 Review the "Cost Analysis" and "Ledger" tab

    • Check how cost basis was derived on the "Cost Analysis" tab

    • Confirm order of transactions on the "Ledger" tab
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  3. 👁️ Review previous transactions with this token

    • Find transactions that preceded the disposal
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  4. 🌪️ Filter by token to view transactions across all wallets

    • If "Wallet-based cost tracking" is OFF, transactions on other wallets can affect each other

There is no "step-by-step" approach you can use to analyze the transactions - there are too many variables that might be affecting the calculations. Check the examples below to get an idea about most common causes 👇

Common scenarios

0️⃣ Cost basis is zero/low

Trace previous transactions with this token. There can be multiple reasons but most common are:

  • Missing transactions (usually deposits/transfers)

  • "Missing purchase history" warning (possibly on another wallet)

  • Swap tag used on one of the acquisitions (assets disposed had $0 cost basis)

  • Implausible transfers/trades merged (chronology is obscured by merging)

🔵 Example: Zero cost basis on a disposal

  • Disposal of ETH shows $0 cost basis

  • But there is no "Missing purchase history" warning and the Ledger is not negative

🟢 Solution: review previous transactions

  • Asset has $0 cost basis because it was transferred from a wallet where it was never acquired ("Missing purchase history" warning on the transfer)

💵 Stablecoins with non-pegged cost basis

There are multiple reasons for stablecoins to have a non-pegged cost basis - check Transactions in stablecoins show gains. Here just one example:

🔵 Example: USDT has cost basis of $2 per USDT

  • A disposal of USDT creates a large loss

  • You noticed that cost basis of USDC is $2 per USDC, while this token should be pegged to $1 USDT (as it turns out - not always!)

  • "Realize gains on crypto-to-crypto" was OFF on this account

🟢 Solution: review previous transactions

  • No loss was calculated when selling LINK for USDT

  • The loss (in the form of a high cost basis) USDT "inherited" from LINK was only realized when USDT was sold for fiat

  • There is nothing wrong in this calculation - Koinly transferred the original cost basis of LINK to USDT, as per settings selected

📅 Missing acquisition on the date

The token was acquired on this date - but it may have had a different symbol! Later, it was traded for the final asset but since Swap was used, the original date of acquisition (and cost basis) was retained.

  • Checking the exact timestamp (hour/minute) on the "Cost Analysis" tab helps in determining which exact token was bought on that day (and later swapped)

  • Filtering by Swap tag often helps as well

🔵 Example: No acquisition of ARB on the date

  • You check the "Cost Analysis" tab to see when the lot was acquired

  • You go to this date, but there are no transactions with this token

🟢 Solution: review transactions tagged as Swap

  • ARB wasn't acquired on this date, but ETH was

  • Later, ETH was sold for ARB and the trade was tagged as Swap

  • ARB inherited the original cost basis and date of acquisition of ETH

  • There is nothing to fix here, apart from deciding if Swap tag was used correctly for a trade like this (for most countries - it wasn't).

🔀 Zero cost but trade is there

This might happen when implausible transfers (or trades) are merged together. Splitting them will reveal the true order of transactions imported and make the issue more obvious. This issue is more common if "Wallet-based cost tracking" is ON.

🔵 Example: SOL shows "missing cost" but purchase is there

  • There's a "Missing purchase history" warning on sale of 15 SOL

  • But acquisition of 15 SOL is right below this warning

🟢 Solution: review ledger entries

  • The purchase of 15 SOL shows before the sale of 15 SOL only because it's a merged trade (multiple trades merged together)

  • When checking the ledger entries, you can see that part of this trade was executed after the sale of 15 SOL

  • If you split this exchange, it's more clear where the issue comes from, as the acquisition of 12 SOL would show after the sale

  • In this example, it's not certain what the solution is - maybe some trade is missing, maybe the sale of 15 SOL has the wrong timestamp and should have happened later - it would need to be confirmed with the data on the exchange

♊️ Exiting liquidity pool redistributes cost basis

When "Realize gains on liquidity transactions" is OFF, Liquidity In and Liquidity Out act as if Swap tag was applied on those trades, so the assets received are accumulating the gain/loss (basically - impermanent loss) when you exit the liquidity pool. Some cost basis methods may affect this even more (especially ACB).

🔵 Example: Accumulated loss in AAVE-USDT pool

  • "Realize gains on liquidity transactions" is OFF

  • Entered LP in April 2022 with 2346.60 USDT and 9.96 AAVE

  • Left LP in January 2023 with 1131.60 USDT and 20.57 AAVE

  • When trading USDT for USDC, USDT has almost double cost basis

🟢 Solution: Review liquidity transactions

  • Impermanent loss was accumulated in USDT when exiting the liquidity pool

  • This showed up only when a taxable event happened - here, a trade of USDT for USDC

🧼 Loss is not calculated at all

This is most commonly reported by users from United Kingdom, Canada or Ireland - countries that have special anti-wash sale rules.

🔵 Example: Loss on selling BONK is not calculated

  • Cost basis method used is "Adjusted Cost Basis/Canada"

  • BONK was bought in March 2024

  • BONK was sold on April 4th to realize losses

  • Even though cost basis is 5000.00 CAD and value only 3200.00 CAD, no loss is calculated by Koinly

  • BONK was bought on April 23rd

🟢 Solution: Review "Cost Analysis"

  • Loss is not calculated because it was retained

  • Since the asset was repurchased, the loss, instead of realizing, was added to the cost basis of the acquired lot

  • This loss isn't completely nullified - it's postponed in time and may be realized in a later disposal

  • Wash sale is indicated on the "Cost Analysis" tab

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