Missing Cost Basis Warnings happen when you haven't shown CoinLedger how you originally purchased or otherwise acquired a certain cryptocurrency.
When this is the case, there is no way for CoinLedger to know what your cost basis in that cryptocurrency is.
These warnings are almost always caused by missing data. It's likely that you haven't imported all of your necessary transaction history needed for calculating your taxes. Learn more below about why Missing Cost Basis warnings occur and how to resolve them using CoinLedger.
JUMP AHEAD:
What is Cost Basis?
Cost basis represents the original value of an asset for tax purposes. It is used to determine your capital gains/losses incurred whenever you dispose of your crypto (trade or sell).
Put another way, cost basis typically represents how much money you put into purchasing your crypto (i.e. how much it cost you).
If you bought 1 Litecoin for $250, your cost basis is $250 per Litecoin.
If you later trade this Litecoin when it is worth $300, you subtract your cost basis from the $300 to arrive at your $50 capital gain from the trade. This is how crypto tax calculations are done at a high level. More info here.
Why Do Missing Cost Basis Warnings Happen?
CoinLedger works by importing all of your buys, sells, trades, and crypto related transactions across all of your cryptocurrency platforms. The application normalizes all of this data and sorts it chronologically.
When CoinLedger detects that you are selling or trading a cryptocurrency that it does not have any record of you ever acquiring, it flags the transaction as a Missing Cost Basis (as you are missing your cost basis for this sale/trade of the particular cryptocurrency).
Why doesn’t your software automatically know my cost basis?
Most of the time it will - if you have imported all of your transaction history data into CoinLedger. Our system can only calculate profits and losses based on the information that you have imported. Like any software, we’re not able to generate fully accurate calculations based on inaccurate or incomplete data. If you leave out information, our software will not be able to calculate the gain or loss on your trades. This is why it’s critically important to import ALL of your crypto transactions for ALL years you have traded.
An Example:
Consider the following transaction history:
1/1/2020 - User purchases 0.5 BTC on Coinbase for $10,000
3/1/2020 - User transfers his 0.5 BTC to Gemini where he sells it for $20,000
Let's use the example of the user above. Pretend that this user only imported his Gemini trading history into CoinLedger and ignored his other data. In this case, CoinLedger will only have data on a 0.5 BTC deposit into the Gemini account along with a sell transaction of BTC for USD at $20,000.
This would trigger a Missing Cost Basis Warning as the user has not shown our platform how he originally acquired that 0.5 BTC.
To CoinLedger, it looks like this 0.5 BTC just magically appeared in the users' Gemini wallet. Without the original purchase transaction data from Coinbase, the user's true $10,000 cost basis in his 0.5 BTC will be missing.
What’s the fix for this? Importing the user’s missing transaction history data.
If the user imports all of his data from both Coinbase and Gemini, CoinLedger will be able to see that the user originally purchased this 0.5 BTC for $10,000 prior to selling it on Gemini.
When the user then sells this BTC on Gemini, CoinLedger will be able to accurately calculate his correct capital gain using the cost basis applied from the original Coinbase purchase: $20,000 - $10,000 = $10,000.
Where can I find my Missing Cost Basis Warnings?
If your account has any assets with a missing cost basis, you’ll see these flagged on the Transactions page with the Missing Cost Basis banner. To dive deeper into this warning, click on this banner and then select Troubleshoot Issue. You’ll be taken to the Missing Cost Basis Troubleshooting Tab, where you can view each asset with a missing basis on your account and interact with dynamic suggestions on how to resolve your missing data. Learn more about the Troubleshooting Tab HERE.
Your Missing Cost Basis warnings will also appear on the To Review tab located on the Transactions page. Here you can see the first transaction where a missing cost basis was detected for each flagged asset on your account. For advanced troubleshooting into each Missing Cost Basis, though, we recommend utilizing the Troubleshooting Tab.
How Do I Fix A Missing Cost Basis Warning?
Step 1: Import your missing transaction history data - be sure to import all the exchanges, blockchains and wallets you have used to buy, sell and swap crypto over the years
Step 2: If this does not resolve your Missing Cost Basis Warning, you can enter a Manual Position to manually resolve your missing cost basis
As mentioned above, your Missing Cost Basis Warning is likely resulting from missing data. To fix your warning, you simply need to import or classify whatever data is missing.
To assist with this, CoinLedger has a helpful tool in resolving MCB warnings called the Missing Cost Basis Troubleshooting Tab. Learn more about it HERE.
Importing your missing transaction history data can include uploading a transaction history CSV file from an exchange you have not imported yet, importing a missing wallet address, or connecting one of your exchange accounts to CoinLedger via API. For any exchanges that we do not offer CSV file or API support for, you can import these transactions into CoinLedger manually.
That said, if you are trying to resolve a missing cost basis warning but do not have access to your transaction history for a given exchange, CoinLedger does allow you to manually enter a cost basis “position” for an asset with a missing basis. You can enter a Manual Position for any asset that is missing its cost basis on the Transactions page.
Please note that CoinLedger always recommends importing your transaction history data to resolve a Missing Cost Basis Warning. In most cases, the solution to a Missing Cost Basis is simply to import your missing transaction history data. However, if you don’t have access to an exchange to download your transaction history or if you simply wish to manually enter a cost basis for an asset, here are the steps you should follow:
Entering a Manual Cost Basis Position
Step 1
Head to the Transactions page of your CoinLedger account. Next, select the Add Transactions button.
Step 2
On the Add Transactions pop-up menu, select the Position tab. This is where you will create your Manual Position transaction.
Step 3
When creating a Manual Position in CoinLedger, you’ll need to fill out the following fields:
Source: The exchange or wallet where this position was created.
Timestamp: The date and time at which the position was created.
Fiat Currency: The fiat currency which you exchanged for crypto.
Cost Basis: The price that you paid in the above fiat currency for this crypto.
Ex: If you bought 1 Litecoin for $70, your cost basis is $70 per Litecoin.
Asset: The crypto asset which you purchased/are entering a Manual Position for.
Ex: If I bought 1 Litecoin for $70, I would enter Litecoin as the asset.
Amount: The amount of crypto which you purchased/are entering a Manual Position for.
Ex: If I bought 1 Litecoin for $70, I would enter 1 as the amount.
Putting it all together, here is how I would enter a Manual Position for 1 Litecoin which I purchased with USD on December 1st, 2023 on Coinbase:
Note that my Cost Basis is in USD, since USD is the Fiat Currency I entered for this Manual Position.
Step 4
Once you have entered each of the necessary fields for your Manual Position transaction, select Save. Your Manual Position will now been created for the asset you selected. You can locate this transaction by filtering for your Manual Positions on the right-hand side of the screen under Transaction Type, as shown below:
You can edit or delete this Manual Position at any time by selecting the three dots next to the transaction and selecting Edit transaction or Delete.
Common Causes of Missing Cost Basis Warnings:
Below are the most common causes for Missing Cost Basis Warnings that we see:
You didn't import the historical data from ALL of the exchanges or platforms that you bought, traded, earned, or transacted crypto on
You didn't include your data from ALL of the years that you have transacted with crypto
You have imported duplicate data and need to delete your imports and re-import only once for each exchange
You didn't include the crypto you received from mining, staking, interest earned, or other forms of income (Learn how here)
You interacted with a smart-contract or dApp that CoinLedger does not yet natively support and there are Uncategorized trades that need to be further classified (Learn how here)
You traded on both Coinbase and Coinbase Pro but did not upload both exchanges
You purchased or sold crypto directly from your self-custodied wallet provider but did not import those buys/sells (Learn more here)
You imported data from an exchange like Binance.US which has known data limitations. Learn more here.
Some exchanges like Binance.US only import one side of fiat buys, which means you might have to edit a deposit to reflect your cost basis. Learn more here.
You bridged from one blockchain to another and need to merge two transactions within CoinLedger to show our app how you acquired an asset with a missing basis. Learn more here.
In all of these above cases, you can fix your Missing Cost Basis Warnings by either importing or classifying your missing data.
NOTE: Uploading transfers, withdrawals, or deposits to our software WILL NOT resolve a missing cost basis warning. Only adding information on your acquisition of an asset-like purchase information, or a record of you receiving that asset as income from staking, mining or interest-will solve missing cost basis warnings. Find more about why here.
Frequently Asked Questions
Can I Run My Tax Report With a Missing Cost Basis?
Yes. CoinLedger will still run your tax report in spite of Missing Cost Basis Warnings. In many circumstances, Missing Cost Basis Warnings will not have any significant effect on your gains and losses. Our platform treats this missing data with a zero cost basis—the most conservative approach.
Learn how your Missing Cost Basis Warnings will affect your tax report in this article here.
Do I need to upload transfers/deposits and withdrawals to resolve these?
No. Uploading a transfer from one wallet to another, or uploading a deposit or withdrawal, will NOT resolve a missing cost basis warning. Only importing purchase or acquisition information for the asset that was flagged with the warning will resolve the missing data. For example, if a fiat sell for 1000 USDC was flagged in your account, you would only be able to resolve this warning by uploading the original purchase (or cost basis) of this 1000 USDC.
I’ve uploaded all of my information, why do I still have a missing cost basis warning? If you’ve uploaded all your information for all years of trading, but still have a missing cost basis, it is possible you have duplicate transactions imported from one of your crypto exchanges. It is also possible that your crypto exchange does not import all of their complete transaction data, and you’ll need to get in touch with our Support Team to identify and get around these limitations. Also, remember to check the total impact of each warning on the Missing Cost Basis Troubleshooting page. Here you can see the potential report impact of each of your warnings. If your warning has an insignificant (or even $0) impact on your potential gains and losses, it can safely be ignored. The IRS allows this.
I have data for the missing cost basis, how do I add it?
The easiest way to import this data is to upload a transaction history CSV file or connect an API key from an exchange we support. If you have a cost basis for one of your flagged transactions that you would like to add manually, you can add this to our software using our Universal Manual Import Template. Be sure to include the date, timestamp, price, and the assets you traded/received in this transaction.
Alternatively, you can manually add a cost basis for an asset by entering a Manual Position into CoinLedger on the Transactions page. You can find details on this process HERE.
I have duplicate transactions, does this matter? How do I get rid of them?
Yes! Duplicate transactions can cause missing cost basis warnings and other software errors. This usually occurs because you have imported multiple API’s or files containing the same information from one exchange. This can also occur if you mix an API import with a file import. You can resolve this by creating a new import for this exchange in the Import page of our software, and then importing with JUST ONE API or JUST ONE file. Then, if everything imports successfully, you can delete the older, original imports, and your duplicates should be resolved.
Still stuck? Think there is a different problem? Please reach out to our team here on Intercom. We are happy to help!