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Cointracking - how to cater for non-USD fiat deposits for US taxpayers

Hi all.

I'm an American living in Sweden. In 2024 on several occasions I moved EUR to Kinesis and purchased metals, using the swift, cheap method available via my Nordea account (SEPA? The one with .030 EUR transaction). As soon as the money arrived on the exchange I spent it all immediately purchasing KAUs or KAGs.

On the other side of the exchange I only made two or three small purchases with my VDC before that convenience was put on hold. So other than income from monthly yields, the only gains realized were on a couple fractional KAG sales for coffee and an ebook.

I always keep track of the EUR-USD exchange rate when I make a purchase from EUR to KAU or KAG. Evidently, Cointracking does not take this into account. On my first pass through the Tax Report feature it shows no USD cost basis on any of my KAG or KAU purchases. As a result all the metal I purchased and still have in my holdings looks like a REALIZED gain as far as Cointracking is concerned, and short term at that.

I haven't yet tried massaging the downloaded file, adjusting it with the exchange rates I recorded at the time of sale. Before I go down that hole I was wondering if there is an easier solution. (I'm using the free version)
 
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Click to expand...
This is my test to mimick your description of your data.
EUR deposit.
Split 50:50 into purchases of KAU and KAG.
One small purchase via the card using each of KAU and then KAG for funding.

Here's the Cointracking test file:

1736686946911.png


When I run the tax report with Cointtracking Settings, Your currency set to EUR, I get this Capital Gains report:

1736687124807.png


However, when I change Your currency to USD, I get this:

1736687257435.png

So, it seems that the US rules calculate an implied gain on different fiats.
Because you don't have an initial trade of USD for EUR, then no gain/loss calculation can be done for your EUR disposal (when you trade it for KAU and KAG), so it's assumed to be a 100% gain (flagged with a warning).

A possible approach here would be to introduce an additional "virtual" trade of USD for EUR prior to your EUR deposit, like I did here:

1736688224872.png


That results in the following capital gains report, which is probably closer to what you were expecting:

1736687691040.png

I don't know whether would be acceptable from a US tax point of view, but it's a possible way of account for where the EUR came from.
 
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Another approach, which might be more accurate if the EUR was eg received from employment would be to label the Deposit as Income.
The cleanest calculation comes from creating an Income record for each purchase, just prior to that purchase:

1736689428507.png

This results in the following Capital Gains report:

1736689494835.png
 
From my tests, the issue seemed to be that there was no cost basis for the EUR "purchase" that you deposited into your KMS account, and that this is what you need to account for from a US tax point of view.
 
I used FIFO for the above tests and apart from the very first test, Your currency was set to USD.
Country was set to US.

If I switch to HMRC (UK calculation), but still using Your currency as USD, the EUR deposit is just treated as if it were GBP (at the relevant exchange rate) and no gain/loss is calculated on it's disposal into KAU/KAG.
 
I see what you mean about labelling the EUR as income, but the EUR deposits don't come directly from my employer. They're only part of my paycheck (in SEK) deposited to my Swedish bank account. And because my entire employment income is tallied elsewhere on the reporting form, I don't want to reintroduce this portion of it as income a second time.

I think your first option will work for me. I want to get the reportable gains right, but I'm not worried so much about proving where the EUR came from. But I will be saving my spreadsheets and printouts in case I'm ever asked to show that the KAU and KAG purchases weren't gains ex nihilo.

Perhaps at some point I could buy USD1 with my EUR before converting to PMs?

Thanks for taking the trouble to look into this on a weekend.

Cheers,
Chris
 
Uchiki, thanks again for helping me out with this. I ended up doing a sort of hybrid. I maintain a sheet of exchange rates to USD for every date that I do something reportable in non-USD. So I used it to do calculations from EUR to USD wherever applicable, and replaced EUR to USD in the currency field. I moved the original EUR value to the Comments field for reference if needed.

Reckon you can close this out unless someone else has something to add.

Cheers,
Chris
 
Chris Hoebeke said:
Reckon you can close this out unless someone else has something to add.
Click to expand...
I'll reword the thread title and move it to the How to area.
The combination of our posts may be a useful reference for someone else in the future.

New thread title, unless you can improve on it:
Cointracking - how to cater for non-USD fiat deposits for US taxpayers
 
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