Net Deposits vs Cost Basis

Hey there,

I am trying to understand the difference between cost basis and net deposits.

I understand that net deposits are the total deposits minus reinvested fiat.

And I also understand that the cost basis is the market price when the asset is purchased converted to fiat.

I have a number of coins where the cost base is less than the net deposits (i.e. the coins cost less then I paid in fiat)? How does that work? What is causing the difference.

Are there some fees (or similar) that are not included within the cost base? If that is the case, how are the fees recognised for tax purposes?

In all cases where this occurs the net proceeds are zero (meaning the coin has not been sold yet).

Thanks so much for helping me understand.

Oscar

Hi Oscar,

Sounds like you have already read about cost basis and net deposits.

The most common reason why net deposits is lower than cost basis is if you are selling assets and then using the proceeds to buy another crypto.

The cost basis of an asset can also be less than market value if you purchase the asset at a price lower than market value. For example, since exchanges, all have slightly different prices for the same asset at the same time due to different amounts of liquidity, different users, different trading volumes, etc., if you got an especially good deal on a purchase or are using an exchange that is consistently better priced than average, you could see the cost basis being lower than their fair market value. If you are seeing this consistently and a large gap between what YOU paid in fiat and the basis, then there may be a different issue at play and it’s best that you contact us (if you haven’t already).

If fees are added to the amount sent, then they are automatically included in the basis.

We are working on one related issue that could be at play here.

Thanks this is useful. The cost basis is between 1.5% and 6% less than the net deposits. In all cases, this is for coins where we have not sold any yet, so net proceeds are zero.

Ideally net deposits would match the cost basis, so we are recognising what it it cost us to acquire the position. If we have the cost basis at a lower amount then we are recognising a higher gain then actual at tax time and therefore likely overpaying capital gains tax when we sell.

Do I have that right?

Will follow up with the transaction as a private message now.

Thanks as always for your fantastic support. Really makes a difference!

Oscar

Thanks for following up with the private message so that we can take a look and get to the bottom of this!