Hoping an admin is able to help as we have to submit a report for 2020 taxes tomorrow. Is there a way to reflect and input BTC to WBTC in the Cointracker platform? Thanks in advance.
We have taken bitcoin that was owned and wrapped it. There is a fee for wrapping it as well as a fee for moving the WBTC out which are significant. We would like to display in the taxes that BTC being wrapped as WBTC is not a sale. Next to show the expense of wrapping and moving the bitcoin as an expense and loss on the taxes. No bitcoin was sold but the expenses are realized and we would like to deduct that interest expense.
Findings: Have uploaded a CSV without luck, also trials with transactions shows it doesn’t seem to include any wrapping/moving fees I try to add in the taxes, tried both fiat and crypto. It doesn’t register any kind of reporting for taxes for BTC to WBTC (btc to btc does trigger taxes and so does wbtc to wbtc but that is not what we are doing). Looks like it calculates a cost basis on it’s own with the date so same day sales/transactions don’t register a gain or loss (didn’t try entering different time of day however). Also had no luck in entering in my own cost basis or editing proceeds, the changes did not show up on the tax reports at all.
Have emailed support with CSV attachment.
Our account is unlocked for support to access it directly.
Checked the support threads and videos.
Another suggested link from a search which suggests to enter it like an ICO but that didn’t work for us.
How can I track an initial coin offering (ICO) or token sale? | CoinTracker Help Center
Copy and paste from the cointracker website about treatment and support of Wrapping:
Sometimes protocols require you to wrap coins before they can be deposited into a specific blockchain’s smart contract. For example, BTC operates on the Bitcoin blockchain, not on Ethereum. Therefore, to use bitcoin with Ethereum-based DeFi platforms, you can “wrap” BTC using a protocol like Ren, which essentially locks your BTC in escrow in exchange for an ERC-20 token version of your BTC called wBTC.
An analogy to wrapping in the non-crypto world is a cashier’s check. It represents the value of dollars in your bank and whoever gets their hands on your cashier’s check owns the right to the underlying money in the bank.
Conservative position: taxable . It could be argued that the wrapped version of the original coin is a new coin resulting in a disposition of the original coin. Crypto-to-crypto trades are taxable (A15).
Aggressive position: not taxable . The intention of wrapping a coin is to add additional functionality to the original asset to make them work with DeFi protocols. Therefore, it is not a disposition and wrapping is not a taxable event.
(CoinTracker defaults to this approach which is pro-taxpayer)