Can I change a cryptocurrency transaction to reflect transferring off an exchange to a different wallet, rather than it appearing as a sale?

[hessian19-gmail-]

I have many cryptocurrency transactions from various exchanges like Coinbase, Binance.US, and Gemini.  In these transactions I have purchased crypto assets and then often transferred them from the exchange to a different wallet storage location, but NOT sold them.  When importing my transaction information into TurboTax from exchanges, it shows these transfers as sale events, however I technically did not sell it, I moved it to another location off-exchange.  How do I reconcile this so it does not appear as a sale event?

[GeorgeM777]

If your cryptocurrency transactions were reported to you on a Form 1099-B, you might consider informing the firm that sent you the 1099-B to amend the relevant entries.   However, as long as you are confident that the transactions at issue were not sales but rather transfers to a different wallet, then you can make the necessary adjustments to basis (cost) so that Form 8949 will show these transactions as having neither a gain nor a loss. 

We assume that these transfers, which apparently have been reported as sales, show the transferred amount as if it was the proceeds from a sale of cryptocurrency.  Assuming that is the case, adjusting your cost basis to equal the proceeds amount (the actual amount transferred to a different wallet) will at least not add to or substract from whatever tax liability you have.  

In the Investment Income section is where you can make your edits to the cost basis as necessary.  

[hessian19-gmail-]

Thank you for the great feedback!  I will go in and either adjust these transactions' basis or simply just delete the event altogether.  Fortunately, I track ALL of my transactions via my own spreadsheet, so I know exactly where everything went.  I was just hoping it would be better integrated.

For future tax years, it would be beneficial if TurboTax creates the feature capability to simply "ignore" a transaction line item.  This method would be much simpler.

Thanks again!

[Andretti92]

I'm not following.  Why would you enter the proceeds amount?  Wouldn't that be the same amount that is showing as a sale?  The amount was amount that was transferred, but since its going in between an exchange and a wallet you own, it should NOT be taxable at all.  By putting an amount in of any kind, it would seem you would still get taxed on that transaction when you should not be.  At least that's what I've gathered.

[JamesG1]

In TurboTax Online Premium, you are able to identify a Sale transaction as a Withdrawal transaction.  A Withdrawal is not a taxable event and indicates a transfer from one wallet to another wallet.

Select the box to the left of the transaction and Bulk Edit to the upper right.

@hessian19-gmail- 

[Andretti92]

I'm not at my computer right now but when I was looking at it, it said withdrawals were capital gains/loss. The specific example I was working on showed a -259.70 loss and I believe it said it was taxable. Why is that happening?

Is it because I used way too many wallets and exchanges to keep track of and may be missing a couple so it doesn't know where the funds went? I know that's going to be a potential issue for me. I wasn't thinking about taxes at the time and got immersed in the crypto world!

[Eliut]

Have you considered using a free service to track your crypto transactions? These services allow connecting your wallets to track input and output coin movements to establish a cost basis. There are also YouTube videos showing how to fix transactions missing cost basis. These web services show the tax impact for each year since you started your crypto journey. A Google search on a free crypto ledger or tracker might give you some light. Just be aware of scammers before start using any of them. And before you select one free provider check on reviews or forums.

I am using one web service which helps validate my taxes. And remember as George777 posted, “If your cryptocurrency transactions were reported to you on a Form 1099-B, you might consider informing the firm that sent you the 1099-B to amend the relevant entries.” Remember all Tax forms are reported to the IRS, including 1099-B, and it shows that you have a gain that you might not have.