TaxBit offers a unique API integration with BlockFi that isn’t found anywhere else! This means that the BlockFi API may behave differently than API connections with other platforms.
In this article:
- What is Cost Basis?
- What is Missing Cost Basis?
- Reporting BlockFi mining income
- How do I fix Missing Cost Basis from BlockFi?
What is Cost Basis?
In short, cost basis refers to an asset's value at the time it is acquired. Keep in mind that this is different from the asset's current market value, and in order to assign cost basis to a particular asset, it's important to make sure that the acquisition data has all been recorded on your TaxBit account.
Before we go any further, please make sure that you have connected all of your exchanges, wallets, and any sources you've used other than BlockFi. It's crucial to get all of your crypto transactions across all sources and all time before you start to look too far into any missing cost basis flags (covered more in the next section).
Adding all your sources will typically resolve those flags without you needing to do any additional work. In other words, don't worry about troubleshooting any cost basis related flags until you know you've uploaded all your transactional data!
To learn more about what cost basis is, check out this great guide HERE!
What is Missing Cost Basis?
You may notice that your BlockFi tax center shows you are missing cost basis. Missing cost basis simply means that the original acquisition of an asset has not been recorded on your TaxBit account. You can learn more about missing cost basis HERE.
Typically, the transactions from BlockFi that will cause missing cost basis are Transfer In transactions. These Transfer Ins mean that there may be assets on your BlockFi account that were acquired on another platform or had been transferred off of BlockFi and then back onto it.
Many of these Transfer Ins may also be from mining that's taken place outside of BlockFi. How to record mining income on BlockFi will be covered in the next section.
You can use your TaxBit account to help fill in missing data that will complete the story and provide the needed context to identify the cost basis of your assets.
Typically, missing cost basis can be resolved by getting your transaction history up to date so that TaxBit has a full accounting of all of your acquisitions, disposals, and transfers between accounts. This can include adding API integrations for your exchanges that are not yet connected to TaxBit, submitting CSV's for exchanges that don't offer an integration, or even manually adding transactions for sources that don't offer one of the previous two options.
How do I fix Missing Cost Basis from BlockFi?
You can check out this guide HERE on adding cost basis, and if you find you need to manually add the transactions, here’s how you’ll do it:
- Manually add the income transaction first on the mining platform where you earned it. Be sure that the time stamp for the income is at least two minutes before the “Transfer In” on BlockFi.
- Next, add the “Transfer Out” transaction at least one minute before the “Transfer In”. As long as both transfer transactions have the same asset type and a similar asset quantity, those two transactions will match up and tell the system where the asset came from and how it was originally acquired.
In short, you’ll end up with a total of three transactions: the “Income” transaction from the mining platform; a “Transfer Out” from the mining platform; and the “Transfer In” on BlockFi. This should ultimately resolve the missing cost basis issues appearing in your account!
Reporting BlockFi mining income
Some users opt to deposit mining income directly into their exchange wallets instead of first storing them in a separate wallet and then transferring it to an exchange. If you have mining income on BlockFi, you’ll see a “Transfer In” transaction on BlockFi recorded on your TaxBit account.
This is because the income was earned on a separate platform and then transferred over to your BlockFi account. If you have missing cost basis on your BlockFi account from mining income, then you’ll simply need to add the cost basis by recording the acquisition on the mining platform and the “Transfer Out” from that platform.
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