Crypto Accounting: Insights and Solutions for Koinly Users

Crypto accounting can be a complex and daunting task, given the volatile nature of digital assets and the intricate regulations surrounding them. From managing fair market valuations to troubleshooting software-specific issues, people often face unique challenges in this rapidly evolving space. This article explores both common and uncommon crypto accounting problems and provides practical solutions, with a special focus on optimizing your experience with Koinly software.

Duplicate Transactions After API Sync

Cause: Improper syncing due to API issues or manual imports overlapping with API data.
Resolution:
Identify duplicates by filtering transactions with identical timestamps and amounts.
Delete one set of duplicates manually.
Avoid importing data both manually and via API for the same wallet/exchange.

Missing Transactions in DeFi Protocols

Cause: Koinly may not fully support certain DeFi protocols or custom tokens.
Resolution:
Use blockchain explorers like Etherscan or BSCScan to locate missing transactions.
Manually add the transaction to Koinly, ensuring accuracy in type and FMV.
Report unsupported protocols to Koinly for future integration.

Incorrect Cost Basis Calculation

Cause: Misconfigured accounting methods (e.g., FIFO, LIFO, HIFO) or missing historical data.
Resolution:
Verify and adjust the selected cost basis method in Koinly's settings.
Reimport transaction history for the affected wallet or exchange.
Ensure all deposits and withdrawals are properly matched to maintain continuity.

Negative Balances in Wallets

Cause: Missing transactions, such as token transfers or unrecorded staking withdrawals.
Resolution:
Audit the wallet's transaction history for gaps or unrecorded transfers.
Manually add missing transactions or contact Koinly support if syncing issues persist.

Misclassification of Rewards and Income

Cause: Automatically imported transactions might be misclassified (e.g., staking rewards labeled as deposits).
Resolution:
Review and manually edit transactions to reflect the correct type (e.g., "Reward" or "Airdrop").
Use Koinly's bulk edit feature for multiple similar transactions.

Unsupported NFT Transactions

Cause: Limited support for NFT-specific protocols or marketplaces like OpenSea.
Resolution:
Record NFT transactions manually by using the FMV at the time of purchase or sale.
Include minting and transfer fees as part of the transaction costs.
Suggest NFT integration improvements to Koinly for future updates.

Errors in Fiat Conversion Rates

Cause: Incorrect or missing exchange rates for less common currencies or obscure tokens.
Resolution:
Check and adjust conversion rates manually within the transaction.
Use a trusted external source for FMV and enter it manually if Koinly’s rate is unavailable.
Contact Koinly support to report rate inconsistencies.

Syncing Timeout Errors for Large Wallets

Cause: Wallets with extensive transaction histories or complex DeFi activities may exceed API limits.
Resolution:
Sync smaller date ranges instead of syncing the entire wallet history at once.
Break the wallet into multiple imports using CSV files for manageable data chunks.

Missing Token Prices for Obscure Cryptocurrencies

Cause: Koinly may not have pricing data for low-market-cap or new tokens.
Resolution:
Add the token’s FMV manually based on data from sources like CoinGecko or CoinMarketCap.
Keep track of price data separately for future reconciliation or tax reporting.

Problems with Tax Report Formatting

Cause: Country-specific tax formats may not align with Koinly's default templates.
Resolution:
Customize the tax settings to match local requirements (e.g., short-term vs. long-term gains).
Export raw transaction data and reformat it manually in a spreadsheet if necessary.
Consult a local tax professional to verify the formatting.

Conclusion

By addressing these uncommon issues, Koinly users can improve accuracy in crypto accounting and ensure compliance with tax regulations. If problems persist, reaching out to Koinly’s support team or exploring alternative crypto accounting tools can also help.

DISCLAIMER

The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that we are not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. CA Mitesh and Associates is India's leading Crypto Taxation Firm which is committed to helping people navigate complex tax laws and banking regulations. Our main aim is to assist the individuals with applicable laws & regulations compliance and providing support at each & every level to make sure that they stay compliant and grow continuously. For any query, help or feedback you may get in touch here - Appointment with CA. Please note the all consultations with the CA are Paid consultations.

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