Coinbase support seems questionable

[bxd76]

According to my Gain/Loss Report, I have a roughly $3300 loss from crypto on Coinbase last year.

First - I decided to go into Coinbase and download the CSV designated as being for TurboTax use.  I imported it into TurboTax.  The site told me it imported fine, and my tax due went UP by about $3000.  Considering I had a $3300 loss, this was obviously wrong.

Second - I tried to directly import from Coinbase by having TurboTax login to my Coinbase account and pull the data out.  It did so successfully.  My tax owed dropped about $300.  But MANY entries are marked with orange as NEED REVIEW.  Those entries are all lacking a Cost Basis.  I still feel like I am not getting credit for many losses on trades.  If the cost basis is showing $0 and it's a sale, that makes it look like I earned a nice return, when in reality it was a loss.

Not sure if this is all a Coinbase problem or a TurboTax problem but this has me questioning other imports I did from other sources.

[JohnB5677]

You have correctly identified the issue.  This is not unique to Coinbase.  It appears with stocks, bonds and other crypto tracking software.  If you do not have the correct basis (price you paid for it), you could show a substantial gain when it may have been a loss, or a lesser gain.

You will have to go through each record and correct the entries.

[bxd76]

Thank you for affirming the issue. 

How do day traders handle this situation?  With thousands of transactions per year how can they possibly be expected to manually correct every cost basis?  I only have two pages of transactions but I’m not sure how to untangle the spaghetti. 

While I don’t see this as a TurboTax error, it behooves Intuit to apply pressure and resources to Coinbase, to get this issue corrected on their end.  I will never use Coinbase again, and TurboTax shouldn’t promote an import function if knowingly the import is errant.

Do we know which crypto exchanges properly document cost basis and fully integrate with TurboTax?  At the least, Intuit could publish a preferred-partners list. 

Thank you. 

[fanfare]

A truly professional trader does not do their own taxes.

The accountant does it and the trader just signs it.

[Chrispleasant]

What does that even mean though because filing taxes should be something everyone can do since we have to all do it as citizens. 

[HelenC12]

@Chrispleasant

The problem is that the IRS expects each transaction looked at in case any of the transactions were losses due to personal use, such as lunch at Starbucks or payments towards bills, etc.

• Losses on use of personal property should not be included on your return.
• However. all the gains are included along with any transactions that were investment related.

One option is to do this outside of TurboTax and only enter the total lines for short term and long term transactions that do qualify to be reported. Please see the TurboTax FAQ: How do I enter a large number of stock transactions in TurboTax Online? Source: AmyC

• You'll have to mail in the supporting details but you'll be able to E-file your tax return.

Cryptocurrency received as payment for goods and services is taxed as earned income:

• If you earned money by providing a service or selling something, you’d have to report it as earned income (either wages or self-employment income) as if you’d been paid in cash. 
• See How do I report income from self-employment?

Cryptocurrency sold, exchanged, spent or converted, is treated as sale of property:

• Like property sales or the sale of stock, any gain or loss from the sale or trade of cryptocurrency is reported as a capital gain or loss. See How do I report Bitcoin or other cryptocurrency as a capital gain?
• If you buy and sell it within 12 months, it’s treated as a short-term capital gain.
• If you hold it for over 12 months, it’s taxed at the lower, long-term, capital gain rates.