Understanding estimated gains and losses on Coinbase
What it means when Coinbase estimates your gains and losses based on assumptions
We typically need a few standard pieces of information to calculate your capital gains and losses. But for certain types of transactions, we don’t have enough data to provide you with an accurate picture of your tax impact. In these cases, we have to estimate your gains and losses using the information we do have. Here’s what you need to know.
First things first...
Coinbase doesn’t provide tax advice. We wrote this article for informational purposes only based on our experience reading IRS guidance, which may continue to evolve and change. None of this should be considered as advice or an individualized recommendation, but it’s important to us that our customers have relevant information available to them in the most accessible way possible. Please consult a tax professional regarding your own tax circumstances.
Why is Coinbase estimating my gains or losses?
If you’ve seen the message below, we can only provide an estimate for your tax impact:
When you buy and sell crypto on Coinbase, we have all the information we need to determine your gains or losses. We take the proceeds (what you got for your crypto when you sold) and subtract your cost-basis (what you paid for it) to determine the difference. This will either be a capital gain or a capital loss that you’ll see on your Gain/loss report (PDF). You can find these transactions under the section called “Cost-basis source: Coinbase.”
However, if you’ve sent or received crypto using a wallet or exchange other than Coinbase, we won’t have access to all of the data we need to calculate your gain or loss.
How is Coinbase estimating the tax impact of crypto I received?
We can accurately display the tax impact of crypto paid to you by Coinbase. But when you receive crypto from an external address, we won’t be able to see your:
The cost basis helps us determine how much you gained or lost, and the date you acquired the crypto determines whether your gain or loss was short term or long term. This is important because gains and losses are taxed at different rates depending on how long you held your crypto.
To give you a general idea of your tax impact, we estimate your gains and losses using an assumed cost basis of $0 (or $1 per unit if the crypto you received was a stablecoin) and treat the date you received them in your Coinbase account as the date acquired. We also assume you received the crypto from yourself, instead of in payment for goods or services or as a gift. If these assumptions are not true, then the information on your Gain/loss report may not be accurate.
You’ll see these transactions with these assumed values on your Gain/loss report (PDF) under the section called “Cost-basis source: not available.”
How is Coinbase estimating the tax impact of crypto I sent?
When you send crypto to an external address, we don’t know who you sent it to, or why you sent it (as a gift or in exchange for goods or services).
Without this information, we can’t tell you for sure how your sends will affect your taxes. Instead, we assume that you transferred crypto from yourself to yourself. These types of transfers don’t incur gains or losses (because you still own the crypto), so won’t see them in your report.
Learn how sending or receiving crypto can affect your taxes in our article: Understanding crypto taxes
What do I need to do before I file my taxes?
You have some options! To update everything on Coinbase and get a more complete picture of your gains or losses, you can answer a few simple questions about these transactions directly on Coinbase to fill in these gaps. Any transactions you modify will be appropriately included in your gains or losses, depending on the reason you selected for your transfers. You’ll also see these transactions with the information you provide on your Gain/loss report (PDF) under the section called “Data source: Customer provided.”
Learn how different types of transactions are taxed in our tax guide.
If you’d prefer to go a different route, we’ve partnered with CoinTracker — a handy crypto tax aggregator — to get you the information you need to file your taxes, whether you keep your crypto on Coinbase or somewhere else. Instead of relying on our assumptions or editing these transactions on Coinbase, you can use CoinTracker to link all your accounts and automatically merge together your data to fill in some of these missing data points. You can also get data and reports covering all your crypto activity as you get ready to file your taxes.
If you choose to skip both of these options, you can still edit the data Coinbase provides by downloading your Gain/Loss Report or Raw Transaction Activity Report as a CSV. We only recommend this if you’re confident of what you need to edit and why.
DISCLAIMER: This article is based on U.S. tax guidance.