Introduction
If you want to clear down prior year data, it's not an option to simply delete it. You need to at least have a summary of the unmatched incoming (purchase etc) data against which future year disposals can be matched.
The process outlined below offers a way of achieving this.
Important note
This process uses the Closing Position report generated by Cointracking to summarise unmatched purchases/income, which then replace the rest of a year's data, which is cleared down.
The Closing Position report is specific to the calculation method you choose within Cointracking.
For many, there is only one calculation method applicable to their jurisdiction eg it's HMRC in the UK.
However, if you have a choice of calculation method eg in the US, then it's important to stick to one method across all years of your data if using this cleardown process.
Process
Disclaimer
I've spent quite a bit of time documenting and testing this process, but if you decide to follow it, you use it at your own risk.
If you decide to proceed, a reasonable first step would be to test the process using a test Cointracking account.
You should also consider how many years of data to retain in full, in case of needing to resolve tax queries. There may be national guidelines on this.
A simpler approach will be just to retain all your historical data.
Preparation
Go to Transactions and do an Export of your data. Choose the CSV (Full export) option. This will give you a backup of your data, including the Trade ID (TX-ID). Be aware however, that it's not possible to incorporate any manually entered values (eg for yields prior to KAU/KAG being on coinmarketcap.com) in the export.
Run the Tax report for the year to be cleared down.
Run the Tax report for the following year.
Load the Tax report for the year to be cleared down.
Scroll down to Closing Position Report and click on CSV Download. Save the file. As a double check, ensure that the numbe of records in the file is the same as shown in the Closing Position Report.
Delete transactions
Go to Transactions.
Delete all records for the tax year to be cleared down. You can do this by clicking on the Date column header to show records in ascending date order, then click the check box for the first record of the tax year, then go to the last record for the tax year and Shift+click the check box. This will select all the records to be deleted. Then just click Delete.
Creating the Closing Position Summary import file
Now use the Closing Position CSV to create an import file.
This will be used to reinstate a shorter list of unmatched incoming (purchase etc) records, which subsequent year tax calculations will be done against.
Create a Cointracking export file from your KMS account.
Discard all the data, but keep the heading line.
You'll need to create a data record in here for each data record in the Closing Position CSV.
You can do the following steps for all records in one go.
Copy
Check that the Closing Position for the cleared down year is still the same
Run the Tax report for the year being cleared down.
Load this tax report.
Scroll down to Closing Position Report.
Ensure that it matches the Closing Position Report from the tax report that you ran before clearing down.
(There is no need to check the capital gains total for this one - there shouldn't be any, as you've deleted all the disposals. We just want to check that the Closing Positions have been duplicated accurately.)
Resolve any anomalies before continuing.
Check that the next year tax calculation is still the same
Run the Tax report for the following year.
Check that the capital gains total is the same or close to the corresponding tax report before you deleted the data.
Resolve any anomalies.
If there are no anomalies, then your cleardown exercise is complete.
Testing
Approach
The above was tested using an account with around 1000 transactions spanning 5 years.
The data included several crypto as well as KAU and KAG and included transfers to/from other exchanges.
Several fiat currencies were used, although the majority was USD.
The data was "raw", without having reconciled issues where some sales had no corresponding purchases, so errors in the tax calculations were expected before cleardown, with the same errors expected after cleardown. This shouldn't invalidate the testing. I was just looking to get the same capital gains totals after going through the cleardown process.
The process was carried out separately for HMRC and FIFO calculation methods.
There were at least 3 separate years of cleardowns for each calculation method.
Older KAU and KAG income records (prior to KAU/KAG being on coinmarketcap.com) were not manually updated, so would have had zero fiat values.
USD was the currency used with both calculation methods.
Observations
The overall capital gains calculation was either spot on or within a few $ for each test except for the final HMRC calculation year.
This was traced down to one record in the Closing Position CSV.
After deleting that, the calculation came out pretty close.
I don't intend to try and reconcile why that was.
The number of "trades" (disposals) reported by Cointracking did sometimes vary between original tax reports without cleardowns and those using the cleardown/Closing Position CSV.
The Closing Position report was much more compact for HMRC than for FIFO. I think this is due to HMRC using averaging of costs, therefore consolidating multiple records into one as opposed to FIFO needing to preserve individual unmatched purchase/income records.
If you want to clear down prior year data, it's not an option to simply delete it. You need to at least have a summary of the unmatched incoming (purchase etc) data against which future year disposals can be matched.
The process outlined below offers a way of achieving this.
Important note
This process uses the Closing Position report generated by Cointracking to summarise unmatched purchases/income, which then replace the rest of a year's data, which is cleared down.
The Closing Position report is specific to the calculation method you choose within Cointracking.
For many, there is only one calculation method applicable to their jurisdiction eg it's HMRC in the UK.
However, if you have a choice of calculation method eg in the US, then it's important to stick to one method across all years of your data if using this cleardown process.
Process
Disclaimer
I've spent quite a bit of time documenting and testing this process, but if you decide to follow it, you use it at your own risk.
If you decide to proceed, a reasonable first step would be to test the process using a test Cointracking account.
You should also consider how many years of data to retain in full, in case of needing to resolve tax queries. There may be national guidelines on this.
A simpler approach will be just to retain all your historical data.
Preparation
Go to Transactions and do an Export of your data. Choose the CSV (Full export) option. This will give you a backup of your data, including the Trade ID (TX-ID). Be aware however, that it's not possible to incorporate any manually entered values (eg for yields prior to KAU/KAG being on coinmarketcap.com) in the export.
Run the Tax report for the year to be cleared down.
Run the Tax report for the following year.
Load the Tax report for the year to be cleared down.
Scroll down to Closing Position Report and click on CSV Download. Save the file. As a double check, ensure that the numbe of records in the file is the same as shown in the Closing Position Report.
Delete transactions
Go to Transactions.
Delete all records for the tax year to be cleared down. You can do this by clicking on the Date column header to show records in ascending date order, then click the check box for the first record of the tax year, then go to the last record for the tax year and Shift+click the check box. This will select all the records to be deleted. Then just click Delete.
Creating the Closing Position Summary import file
Now use the Closing Position CSV to create an import file.
This will be used to reinstate a shorter list of unmatched incoming (purchase etc) records, which subsequent year tax calculations will be done against.
Create a Cointracking export file from your KMS account.
Discard all the data, but keep the heading line.
You'll need to create a data record in here for each data record in the Closing Position CSV.
You can do the following steps for all records in one go.
Copy
- Amount to Buy Amount
- Currency to Buy Currency
- Date Acquired to Date (With the HMRC calculation, I found that some Closing Position records had a date of "-". I just set these to the last day of the cleared down tax year)
- Buy/Input at to Exchange
- Cost Basis in USD to Sell
- Type = "Trade"
- Sell Currency = USD
- (optionally, but quite useful) Comment = "b/f from {year}" eg "b/f from 2023" or "b/f from 2022-23"
Check that the Closing Position for the cleared down year is still the same
Run the Tax report for the year being cleared down.
Load this tax report.
Scroll down to Closing Position Report.
Ensure that it matches the Closing Position Report from the tax report that you ran before clearing down.
(There is no need to check the capital gains total for this one - there shouldn't be any, as you've deleted all the disposals. We just want to check that the Closing Positions have been duplicated accurately.)
Resolve any anomalies before continuing.
Check that the next year tax calculation is still the same
Run the Tax report for the following year.
Check that the capital gains total is the same or close to the corresponding tax report before you deleted the data.
Resolve any anomalies.
If there are no anomalies, then your cleardown exercise is complete.
Testing
Approach
The above was tested using an account with around 1000 transactions spanning 5 years.
The data included several crypto as well as KAU and KAG and included transfers to/from other exchanges.
Several fiat currencies were used, although the majority was USD.
The data was "raw", without having reconciled issues where some sales had no corresponding purchases, so errors in the tax calculations were expected before cleardown, with the same errors expected after cleardown. This shouldn't invalidate the testing. I was just looking to get the same capital gains totals after going through the cleardown process.
The process was carried out separately for HMRC and FIFO calculation methods.
There were at least 3 separate years of cleardowns for each calculation method.
Older KAU and KAG income records (prior to KAU/KAG being on coinmarketcap.com) were not manually updated, so would have had zero fiat values.
USD was the currency used with both calculation methods.
Observations
The overall capital gains calculation was either spot on or within a few $ for each test except for the final HMRC calculation year.
This was traced down to one record in the Closing Position CSV.
After deleting that, the calculation came out pretty close.
I don't intend to try and reconcile why that was.
The number of "trades" (disposals) reported by Cointracking did sometimes vary between original tax reports without cleardowns and those using the cleardown/Closing Position CSV.
The Closing Position report was much more compact for HMRC than for FIFO. I think this is due to HMRC using averaging of costs, therefore consolidating multiple records into one as opposed to FIFO needing to preserve individual unmatched purchase/income records.
