Cost Basis Tracking Mistakes & How to Fix Them in CoinLedger

Cost basis is one of the most important elements in crypto taxes. A small mistake can dramatically overstate your gains—or underreport them, which could trigger an audit. CoinLedger makes cost basis tracking easier, but errors still happen. Here’s how to identify common mistakes and correct them.

Step 1: Understand What Cost Basis Is

Cost basis is the original value of a crypto asset, usually including:

• Purchase price (in your local currency)
• Transaction fees (e.g., exchange fees or gas fees)

Why it matters:

• It determines your capital gains/losses when you sell, trade, or spend crypto.
• Accurate cost basis prevents overpaying or underreporting taxes.

Step 2: Common Cost Basis Mistakes

1. Missing Transaction History
   • If an exchange or wallet transaction isn’t imported, CoinLedger may assign $0 cost basis.
   • Common with smaller wallets, old exchanges, or DeFi protocols.
2. Incorrect Fees Handling
   • Gas or trading fees not added to the cost basis.
   • This can overstate your gains if ignored.
3. Duplicate Entries
   • Importing the same CSV twice or syncing an API multiple times can double your cost basis.
4. Wrong Cost Basis Method
   • Using FIFO when you intended LIFO (or vice versa) can drastically change reported gains.
5. NFT and DeFi Oversights
   • NFT purchases often omit gas fees, affecting gains.
   • DeFi swaps or liquidity pool interactions may trigger multiple taxable events that are misclassified.

Step 3: How to Fix Cost Basis Issues in CoinLedger

1. Check for Missing Transactions

1. Go to Transactions → Review.
2. Look for flagged transactions with missing prices or unknown cost basis.
3. Manually add purchase price or import missing CSVs from exchanges or wallets.

Pro Tip: Use CoinLedger’s “Import from CSV” function for older or unsupported wallets.

2. Include Transaction Fees

1. CoinLedger allows you to edit individual transactions.
2. Add exchange fees or gas fees to the purchase cost.
3. Ensure that selling fees are also reflected in the sale price.

Pro Tip: Fees are deductible and reduce your capital gains.

3. Remove Duplicate Transactions

1. Filter your transactions by date or asset.
2. Look for duplicates imported from multiple exchanges or wallet connections.
3. Delete or merge duplicates to prevent overstated gains.

4. Adjust Cost Basis Method

1. Navigate to Settings → Tax Settings → Cost Basis Method.
2. Choose between:
   • FIFO (First In, First Out)
   • LIFO (Last In, First Out)
   • HIFO (Highest In, First Out)
3. Recalculate your tax report after changing the method.

Tip: For long-term investors, FIFO often results in lower short-term gains.

5. Handle NFTs and DeFi Properly

1. Include gas fees and marketplace fees in NFT cost basis.
2. For DeFi swaps, ensure CoinLedger correctly separates each token’s basis and income portion.
3. Review flagged or complex transactions in DeFi & NFT reports before generating your final tax report.

Step 4: Recalculate and Verify

1. After making adjustments, go to Tax Reports → Summary.
2. Verify that:
   • Capital gains/losses match your manual calculations
   • Fees are included
   • No transactions are missing or duplicated
3. Generate your PDF/CSV reports for submission.

Pro Tip: Use CoinLedger’s audit trail to see exactly how each cost basis was calculated.

Step 5: Prevent Future Mistakes

• Sync wallets and exchanges regularly, not just at tax time.
• Track every transaction (NFTs, DeFi, staking rewards, airdrops).
• Keep CSV backups of all imported data.
• Review flagged transactions before filing.

✅ Summary

Mistakes in cost basis tracking can inflate your taxes or trigger audits. In CoinLedger, the main fixes are:

1. Add missing transactions
2. Include all fees
3. Remove duplicates
4. Confirm the correct cost basis method
5. Properly categorize NFT and DeFi activity

Following these steps ensures your tax report is accurate, compliant, and audit-ready.