How Do I Resolve "Unknown Gains"?

Missing cost basis (MCB) is one of the most common issues our users run into when setting up their account, so if you’re seeing “Unknown Gains” on your account, don’t worry! You’re not alone, and we can help you resolve those flags.

An explanation of the term "Missing Cost Basis" can be found HERE.

In this article:

• Prerequisites to resolving "Unknown Gains"
• Picking a disposal
• MCB common causes troubleshooting guides

Prerequisites to resolving "Unknown Gains"

Before diving headfirst into each flagged transaction, it’s important to verify a few things first.

First, ask yourself:

• Have I brought in data from every exchange and wallet that I have ever bought, sold, traded, received or held crypto on?
• For each exchange or wallet I have connected, are all my trade, transfer, buy, sale, income, and expense transactions showing?
• For each exchange or wallet, is my entire transaction history from 2014 until the end of 2021 (as applicable) represented in my account?

In short, we need to verify that we have EVERY transaction that has EVER occurred on ALL the platforms you’ve used. If you need help meeting one of these criteria, please reach out to our Support Team, and they'll be happy to help you get all your transaction data into your account.

Once you believe that the three statements above are true, there are three options for resolving your missing cost basis:

1. You can add transactions to your My Transaction page;
2. You can remove transactions; 
3. Or you can modify a portion of the transactions already in your account.

Picking a disposal

Now you’re ready to pick a disposal or group of disposals to focus on. For Sale and Expense transactions, the currency being disposed of is clear, as there’s only one currency involved. With Trade transactions, the currency being disposed of is always going to be to the left of the arrow, indicating which currency left your possession.

In the image above, I have several BTC disposals on Binance with missing cost basis. The currency and the platform in question are the two most important things to pay attention to. When you have your accounting method set to HIFO By Exchange and you see "Unknown Gains" flags, here’s what TaxBit is trying to tell you:  “At the time of this transaction, we don’t have enough of this currency on this platform to cover this disposal.”

So in my situation represented above, I need to figure out how that amount of BTC made it onto Binance to be disposed of/traded at that time. Once I can answer that question, I’ll then need to either add to, remove from, or edit the transactions in the My Transactions page.

MCB common causes troubleshooting guides

There are five common scenarios that most often cause missing cost basis. Follow the hyperlink in each scenario for a more detailed explanation of the problem and how to fix it.

1. Missing Transfer Data: Under SPEC ID/HIFO By Exchange, we need a transfer out and transfer in transaction that corresponds to each instance where a crypto asset is moved between platforms. 
2. Missing Acquisition Data (Buys and Trades): Buy and trade transactions are REQUIRED for us to be able to assign cost basis to your disposals, regardless of your accounting method.
3. Missing Acquisition Data (Income): It's important to ensure that your income transactions are included in your TaxBit account, and that they are labeled as such. Some platforms pass income transactions as 'transfer in' transactions and will need to be edited manually. 
4. Duplicate Disposals: Having duplicates of the same disposal will always use up more of your existing asset pools, and when paired with non-duplicated acquisition and transfer data, will often lead to cost basis issues. 
5. Transactions Out Of Chronological Order: Occasionally we'll see transactions not being reported to us in UTC. When that happens, it's common to see transfer and acquisition/disposal data appearing out of order. 

Still have questions? Send us an email at support@taxbit.com or chat with us using our live chat feature, and we'd be happy to help!