What does missing or $0 cost basis in TokenTax mean?
As you work on importing data into your TokenTax account, you may see sales of cryptocurrency with a $0 cost basis warning. This means that our algorithm couldn’t find a matching purchase for the asset sold or exchanged. Without this purchase, a cost basis cannot be established.
In most cases, missing cost basis means that you’re missing transaction data.
Let’s run through the example pictured above.
0.1012 BTC was exchanged for ETH. From a tax standpoint, this is a sale of 0.1012 BTC, so you would realize a capital gain or loss on that BTC.
However, all cost bases for BTC have been exhausted — there are no more purchases remaining to match this sale too.
This means you’re missing acquisitions of BTC. In the example above, the account was missing a Cash App CSV import.
When a sale cannot be matched to an acquisition, TokenTax assumes a $0 cost basis for the sale. This may increase your capital gains beyond what you expect.
How do I check for missing cost basis?
You can quickly identify missing cost basis by going to your dashboard and clicking the Warnings dropdown at the top left of the table. Select the missing cost basis option, and you’ll see only sales with missing cost basis.
How do I fix the missing cost basis?
Missing cost basis means that you’re missing transaction data. You will want to identify and fix this gap in your data. Common situations of missing data include:
Not all exchange data added.
Off-exchange activity including ICO purchases, mining/staking, and gifts or income received not added.
Transactions made on a DeFi platform not automatically supported by TokenTax.
Read our article on identifying missing data to learn in detail about what kinds of data you may be missing.
I have missing cost basis on DeFi related transactions. How do I fix that?
TokenTax automatically supports many DeFI platforms automatically (and you can see a full list of supported DeFi platforms in the Ethereum wallet import instructions). However, new platforms and protocols are launched very often. Furthermore, existing platforms we do support are often launching new features.
For DeFi cost basis, you will want to examine the coins sold that don’t have cost basis. How did you acquire them? DeFi missing cost basis is usually a result of missing transactions including the following kinds of activities:
Swaps made on a DEX
Yield farming income
Purchases via other methods like bonding curves
Entering and exiting liquidity pools
Can I still file with $0 cost basis?
You can still file your cryptocurrency taxes if you have sales with $0 cost basis. While we recommend taking steps to fix your $0 cost basis (outlined below), $0 cost basis is a valid position to take if you can not source records for the cost basis or if it’s for a relatively small amount.
Can TokenTax help me fix missing cost basis?
If you’re reconciling your own account, our support team is happy to assist with helping you get your data in to fix the missing cost basis.
Can’t I just change the cost basis myself?
We don’t allow direct alteration of the cost basis — for good reason. The IRS expects all reported capital gains and losses to have supporting records, as confirmed by QA #45 in the IRS cryptocurrency tax FAQ.
If you were to change your cost basis as it's reported on your tax reports, your transaction records wouldn’t match what you are reporting.
We recommend that you follow the steps outlined in this article to fix your cost basis by addressing any issues with your transaction data.