GBTC and ETHE trusts on 1099B Proceeds from Broker and Barter Exchange Transactions

[rudyrabbit]

• @scoaste 

If all your purchases were less than 12 months prior to proceed dates or they we’re all more than 12 months. I would just combine  them for a total and using “various” for the purchase date.

if you have a mix of short and long term purchases and or any actual sales during the year. I haven’t a clue as to how to allocate the transactions.

Don’t have a clue what that cost factor number is for I had that reported to me as well.

if you had any actual sales, I found a spreadsheet to help with those calculations at:
https://support.wealthfront.com/hc/en-us/articles/4415890925972-How-do-I-report-taxes-for-GBTC-ETHE-...

Disclaimer: I’m just a guy on the Internet. 

[mk7119]

I have similar issues, but noticed that the sum of the undetermined B or E (Basis not reported to IRS) is the exact same total and individual amounts of each transaction....it appears to be a fee for every week there is a balance.

Grayscale Bitcoin Trust BTC...      1d Proceeds & 6 Reported Gross or Net     Date Acquired

Date               Qty

1/13/21          0.000                          1.18                                                                     N/A               All Blank to the right

1/20/21          0.000                          1.57                                                                     N/A

1/27/21          0.000                          0.75                                                                      N/A

62 other entries between GBTC and ETHE

Then under the Fees and Expenses section of the tax report:

Description            Date            Amount             Transaction type

GBTC                      1/13/21           -1.18               Gross proceeds investment expense

GBTC                      1/20/21           -1.57               Gross proceeds investment expense

GBTC                      1/27/21          -0.75                Same as above

The total of the proceeds equals the total of the investment expense...

I do have 3 sells with correct details of GBTC, but trying to figure out what to do with the above.

Do I put the cost basis of Proceeds as $0.00 so this will produce the same amount as investment fees or is there another line item to record these exact amount of investment fees?

Do I zero out these "weekly fees" that are listed as and report only investment expenses?

Or other?

Thanks for any help

[brandonpadraig]

thanks

[brandonpadraig]

GBTC sells small amounts of bitcoin to cover expenses.  These small sales are passed through to you,and you have to deal with them on your return.  I've been looking at this for a day and I can't figure it out.

The spreadsheet at wealthfront is great if you know the qty however as is the case it's so small no one actually has a qty that they can enter into the calculator.

Does anyone know how we can determine qty sold for each of these small transactions?

[DianeW777]

If you don't have the information, you can enter an educated number to the best of your ability or simply use the number 1 to represent a quantity.

• Quantity is the amount of cryptocurrency you own/sold. You should be able to tell on your tracking spreadsheet or system you use to track all your transactions of purchase, earned or received by other methods.
• Equity is the value of your position. 
• Average Cost is average cost of your position, if you were to own a full unit. 

Please update here if you need additional assistance and one of our tax experts will help you.

@brandonpadraig

[scoaste]

I had several purchases prior to 2021 with no sales.  I ended up multiplying my average cost basis by the Principal payment Cost Basis Factor corresponding to each proceeds entry on my 1099-B for updating the adjusted cost basis, with various as the purchase date.

[scoaste]

I attempted to report a total of these negative entries as other investment expenses, but TurboTax said it wouldn't use it.

[brandonpadraig]

@GeorgeM777

The tax document from Grayscale if available below.  

On my 1099 I am provided proceeds and a figure called principal payment cost basis factor.  No cost basis is provided. I have several of them

Grayscale tax document

https://grayscale.com/tax-documents/

[rudyrabbit]

@brandonpadraig 

Read the whole thread, I've answered these questions.

[berndog]

I also have spent hours on trying to resolve the issue with both GTBC and ETHE, also called TTAX and got no help.

In my case TTAX is also generating a "Employee Stock Transaction Worksheet" for some of these GTBC and ETHE and I am not an employee!!!

Has anybody also had that problem???

TTAX please respond to this post, your phone HELP desk has no clue.

[berndog]

Why are these trades creating  EMPLOYEE STOCK TRANSACTION WORKSHEETS in Turbo Tax Deluxe???

I am not an employee. how can I correct this?

[knienab1]

Your messages have been more helpful than anyone I've tried talking to about this from Vanguard, GBTC, or TurboTax.

I think I understand what I need to do, but I'm still a bit confused as, like you, I purchased my GBTC a long time ago (2016/2017) and have sold some since then (nothing in the last year though).  So I think I need to go back to the filings from those years and get my original Bitcoin per share from those dates?

Then I use that Bitcoin per share (after subtracting out my sales and incorporating the 91:1 stock split) in your formula for each "Sale" listed on my 1099 to get the cost basis for each.  Then I use the cost basis for each to figure out a gain/loss for each and sum those as 1 total  transaction for the entire year?  Does that sound correct?

Thanks again, random guy from the internet.

[rsherry]

I think the simplest way to do this is to not calculate the basis for the tiny amount of the trust assets (ex. BTC) sold.  If you do calculate the basis and use it to offset the proceeds for the BTC sold to pay trust fees, you will reduce your basis on your shares remaining in GBTC.  If you don’t calculate the basis for the bitcoin sold by the trust, you will keep your basis the same and recognize a smaller gain in the future (assuming ur in a gain position).  In other words, it’s a timing difference and the IRS will get their $$ a little bit ahead.  But you have to consider the cost (your time and effort to do the calculations) vs. benefit.

On the flip side, the proceeds were used to pay trust investment expenses.  Those expenses also flow through to your tax return.  However, investment expenses are subject to the 2% floor, and the vast majority of us will probably be unable to recognize them.

Hope this helps….lots of confusion out there.

[berndog]

I just netted the gain to zero, amounts too small to waste the time to calc.

[barry13]

I think your on the right track with this approach.   Using the formula that @rudyrabbit proposed A/(BxCxD) doesn't seem to make sense because you end up with a value that is in BTC and you need a value that is in dollars.  

So you really need to just multiply the total $ you invested as into GBTC and multiply that by the Cost Basis Factor in the 1099-B to obtain your Cost Basis that  And if you are making multiple purchases of GBTC, then you'll need to calculate your total amount of money invested (eg, Basis) for each transaction by looking up the share price of GBTC.