I notice my current “gains” for 2021 is somewhere in the $5k region but that doesn’t sound right to me so I’m looking for some clarification. See this screenshot:
Wouldn’t gains be the profit? The difference between the dollar value of what you bought the coins for and dollar value what you sold them for right?
We’re not even 2 months into the year and I know that I haven’t sold anything that would have netted me a $5,000+ profit. The total value of coins I’ve exchanged for others could very well be 5k, but definitely not a gain as far I’m concerned.
I’ll give an example, often I’ll put USD from bank account into a fiat on ramp exchange like Coinbase, then I will trade that USD for the equivalent amount of XLM cause its cheap to send. I will then send that XLM to another exchange and trade it for USDT to then buy a different crypto currency. So really it’s total of 3 transactions (not including the withdrawal) before I have the desired coin. [(1.USD → XLM)(2.XLM → USDT)(3. USDT → Desired Coin)] The difference in value should be minimal so why does Cointracker believe that I’m already $5k in profit when I really don’t think I am.
I have sold a few cryptos here and there from last year that have appreciated but just nowhere near that value of 5k. If this is just the cost basis, it shouldn’t be considered a gain as far as I can comprehend.
Can someone please help me understand this better?
I sure don’t want to pay taxes on gains I didn’t really net for myself. I’m concerned that number will grow significantly through out the year as I swap cryptos for other cryptos. I wish to be in full control here and I don’t currently feel I am. I’d like to understand how this system comes up with that number. Please help! @Chandan .
Thank you for reading my post.