Crypto acquisition dates

[postbox_shashank]

Hi Turbotax gurus,

Problem statement –

I have a Crypto account with a renowned service provider. Initially, they were having two platforms for the trade execution - Platform A (main flatform) and Platform B (supporting flatform - with lower commission). I purchased crypto at both platforms. 

They decided to close their Platform B and asked me to transfer the crypto holdings to the main platform. Due to this, I transferred the crypto to platform A on “single date”. The acquisition dates in Platform B and transfer dates to Platform A are more than 1 year old now. 

Now, the crypto provider is providing me the “Cost report” and asking me to update the cos basis (acquisition values) “Manually” for the transferred cryptos to platform A. I am surprised they have the cost report from platform B and they can update these values from their end.

While manually updating these figures, the platform A is confirming the Qty of the crypto but asking for date acquired (single row per crypto) and total cost basis.

Questions:

1. Can I take single date = Date of Transfer of Crypto to Platform A? All the dates are more than 1 year and best of my understanding, IRS is asking only short term (Leser than 1 year and long term (more than 1 year). As per this, it is a case of long term gain. 
2. Cost basis needs to match with the values provided by the provider. The challenge is that I am sending my interpretation of their cost reports to them but they are not confirming these numbers. I am not sure what can be done here?

[Spino]

Something's wrong here. They should not be asking you for that information. If they don't have it, they should be reporting cost basis undetermined. You of course are ultimately responsible for reporting the right cost basis and the right dates, not them. Bummer! It sounds like a lot of work is ahead.
In some cases when, despite your best efforts, cost bases are not recoverable, the best you can do is come up with an appropriate approximation.

For instance, Bob TT transferred his account for one brokerage to another, and then to another, and somewhere along the way the cost basis was lost. Then this year, Bob TT sold his investment. Unfortunately he didn't keep records of his purchases because he assumed the broker was tracking it--or they got eaten by the dog, whatever. So now Bob TT figures he originally bought the stock (crypto in your case) in 2000, probably about May, so let's say May 15, and he looks up in the historic tables and finds the closing value on May 14 was $10 and on May 15 was $11 per share. He uses $10.50 per share for the 100 shares plus $105 in transaction costs, which is about what his broker was charging back in May 2000, and reports the basis for the 100 shares at 1050+105=$1155 on May 15, 2000. Since the sales price on June 13, 2023 was $11100 for 100 shares, he reports a LT gain of $11100-$1155 and lists this with Box E checked, because he got a 1099 but it didn't list the basis.

[postbox_shashank]

Hi Spino,

Thanks a ton for your response on this thread. Yes, i agree that they should not be asking me for these details. Overall, this is a substandard service from the exchange. I have tried my level best but what i got from them is the cost report only. They are asking for manual updates at their platform after going though this report. I have sent my analysis of this cost report but they have not confirmed anything thus far.

Good part is that i have not sold any Crypto in the last year and this is a case of transfer from one platform to another platform only. 

I have am enclosing this report for your ready reference. Given below is the link of this report:

https://mega.nz/file/ZzsXma5Y#JskpcXhPKw1LkBXE8hx8RuRZYJ9MRAJoHtr038lgHo8

1. 1st tab in excel - Summary of the number of Crypto bought - This tab provides the summary of the number of the Crypto purchased at the exchange along with the amount spent for this Crypto. Example - Crypto A - Purchased Qty was 4.872 for USD [phone number removed]. Crypto B Purchased Qty was 829.88 for USD [phone number removed]50541. So on. 

2. 2nd tab in excel - Exchange transactions - This tab provides the detailed transactions from the exchange (Purchase and transfer).

Example 1 - Single purchase - Crypto A QTY 4.872 was purchased (Referring column C = Match) on 06/15/2022 for USD [phone number removed] (Old platform). This is another row showing transfer (Referring column C = Transfer) to Platform Y for all the Qty for this Crypto on 15/11/2022. In this case, I will be considering Acquisition value as USD [phone number removed]. 

Example 2 - Multiple purchases - Example - Crypto B Qty 829.88 was purchased on various dates but transferred on 15/11/2022. The acquisition amount is USD 579.44.

3. 3rd tab - Summary - Is the summary of the cost report report for updating the acquisition details. This tab is also showing the screen shot from the exchange for updating the details. They are providing single row per Crypto. I will be utilizing the information from row 2 to 9 for for updating the acquisition reports:

I think i can take single date as 11/15/2022 for showing acquisition in this case. Anyhow, if i sell the Crypto now then it is the case of "Long term capital gain" any how. 

Please feel free to raise questions if any. 

Thanks,

Shashank 

[Theausted]

It sounds like you're dealing with a bit of a headache with the manual entry of acquisition dates and cost basis for your crypto. Regarding your first question, while you technically can use the transfer date to Platform A as the acquisition date, it’s essential to maintain accuracy with the original purchase dates to ensure you correctly categorize your holdings as long-term (held for more than a year) or short-term (held for less than a year) for tax purposes. The IRS is strict about these classifications, and using the wrong date might cause complications.

For the cost basis, it’s definitely frustrating that your provider isn’t confirming the numbers on their reports. If they’re giving you the cost report, you should generally match those numbers as best as possible, but without their confirmation, I’d recommend keeping detailed records of your interpretations in case any discrepancies arise.

Since you’re handling this manually and it's causing confusion, you might want to check out tools like linkpay to help streamline the process and reduce errors. It's a useful solution for managing crypto transactions and ensuring you’re staying compliant without all the manual input.

Hope this helps, and good luck getting everything sorted!