Do you need to import data from your self-custodied crypto wallets like Ledger, Trezor, MyEtherWallet, MetaMask, or Coinbase Wallet to do your crypto taxes?

The simple answer: yes. While CoinLedger can still generate your tax reports accurately without self-transfers and other non taxable transactions, we still recommend importing these transactions wherever possible.

Below, we’ll dive into why!

The CoinLedger app has two main functions:

While only taxable transactions such as swaps, trades, and crypto income events are needed to do your tax reports, a complete transaction history including both taxable AND nontaxable transactions is needed to accurately track your crypto portfolio.

Let’s dive into which transaction types are needed for each of these two main CoinLedger functions!

To properly generate your crypto gains, losses, and income reports, CoinLedger needs all of the data that makes up your taxable events.

A taxable event is simply a scenario that triggers a tax reporting requirement. Whenever you incur a taxable event, you trigger income of some sort that needs to be reported on your taxes.

The following transaction types are key for CoinLedger to accurately calculate the income associated with your taxable events:

Each of these transaction types are crucial for setting your cost basis in a given cryptocurrency or determining the gain or loss when you dispose of a cryptocurrency.

What transaction types are not necessary for CoinLedger to accurately calculate your taxes?

CoinLedger does not need your wallet transfer data in order to generate your tax reports because wallet transfers do not trigger a taxable event. Simply sending crypto from one wallet you own to another wallet you own is not considered a disposal of your cryptocurrency, and thus, it does not trigger a capital gain.

However, this does not mean that you shouldn’t import this data into CoinLedger. We still recommend importing all of your data, from all exchanges, wallets and blockchains that make up your crypto transaction history.

CoinLedger’s Portfolio Tracker tracks the amount, price, market value, cost basis, percentage change, and unrealized return of the cryptocurrencies held across all of your imported wallets.

It sums the transactions across all of your imported wallets to arrive at a “Global Wallet” asset balance. This global asset balance is what gets reported on the portfolio tracker, and it’s a sum of all the transaction types on your account including both taxable and nontaxable events. That means that even nontaxable transactions like self transfers, deposits and withdrawals factor into your global asset balance shown on the Portfolio Tracker.

The following transaction types are key for CoinLedger to accurately calculate the amounts, market value and unrealized return of all the cryptocurrencies held across all of your wallets:

To illustrate the transaction types needed to track your portfolio versus those needed to generate your tax reports, imagine the following example:

If you import just your crypto exchange transaction history from Coinbase and Gemini into CoinLedger, your tax reports would be accurate, but the balances of your assets shown in the Portfolio Tracker would be inaccurate.

Why? Because all CoinLedger needs to generate your tax reports is the data that makes up your taxable events. In the above example, this would be the purchase of 1 BTC on Coinbase and the sale of 0.9 BTC on Gemini. Your tax reports would be complete if you just imported this data.

However, in order to accurately calculate the amount, market value and unrealized return of all of your crypto assets, you would need to import not only your Coinbase and Gemini transaction history into CoinLedger, but your Ledger wallet transactions as well. Otherwise, the balances shown in the Portfolio Tracker would be inaccurate. This is because CoinLedger needs the data from both your taxable and nontaxable events in order to accurately track your portfolio.

Put simply, while CoinLedger only needs taxable transactions such as swaps, trades, and crypto income events to do your tax reports, a complete transaction history including both taxable AND nontaxable transactions is needed to accurately track your crypto portfolio. That’s why we recommend importing as much of your crypto transaction history as possible.

Our team is always happy to clear up any questions you have about your crypto taxes. Just send us a message!