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User-Provided Acquisition Details

The Taxbit system allows for clients to collect acquisition details related to a deposit of digital assets onto the platform, such as date acquired and amount paid. This information will be utilized for the cost basis calculations, and reported on the Form 1099-DA, however, the information will not be reported to the IRS.

It is possible that multiple lots make up a single Deposit transaction, to the extent the asset was acquired on separate occasions. See below for an example:

Original Deposit transaction for 5 BTC on 11/20/2023

The user-entered cost basis may be as follows:

  • 1 BTC at $100 on 1/1/2021
  • 2.5 BTC at $500 on 2/5/2021
  • 1.5 BTC at $400 on 7/26/2022 

Please note: When submitting user-entered cost basis information, you must provide details covering the full transfer quantity. If the total of the lots does not equal the transfer quantity, the ingestion process will fail.

Field Description
Account ID* Account ID associated with the Deposit transaction
Transaction ID* Transaction ID of the Deposit transaction
Asset Code* Asset on the Deposit transaction (used for additional validation)
Transfer-Lot Quantity*

Amount of the deposited asset that was purchased at a single time. 


 

As noted above, there may be multiple quantities for a given Deposit transaction
Transfer-Lot Cost Basis*

Original amount paid for the quantity listed


 
Transfer-Lot Acquisition Date/Time* Original acquisition date/time for the quantity listed
Effective Date Date for which the user-provided basis information will be used for lot selection

 

Effective Date

As part of this data model, you will be able to provide an “effective date” for any user-provided information. Starting on the effective date, the user-provided information will be considered when determining which lot is selected for disposal. For any disposals that occur after the transfer date, but before the provided effective date, the user-provided information will not be considered when determining which lot is selected for disposal.

If an effective date is not provided, our system will default the effective date to the date of the transfer – meaning our tax engine will complete a recalculation of all activity from the date of the transfer, going forward. Note that this may cause changes to previously reported cost basis information.

Our system will account for instances where a portion (or the entirety) of the transfer lot is no longer available as of the provided effective date. Our system will select a portion of the user-provided information to exclude from inventory going forward. It will not, however, hydrate the previous dispositions with the user-provided cost basis information, to avoid any unnecessary corrections.

While any date after the date of the transfer may be selected (e.g., the date in which the user-provided information was received), the following table provides some additional considerations:

Date of Deposit Effective Date (assuming the user-provided information was obtained in the current year)
Current year Effective as of the date of the Deposit (i.e., default when no effective date set)
Prior years

1/1 of the Current Year

For user-provided information that is received in the beginning of the new year (e.g., through 2/1), some clients may choose to set an effective date as of 1/1 of the previous year, since tax forms have not yet been generated for that year.