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Transfers: unspent distributions treated improperly for UTXO model blockchains (BTC, ADA, etc.)
Ash
Updated Septembder 2023
Unspent distributions for transfer and send transactions
CoinTracker is not correctly recording the amount that is not spent in a "send" transaction on UTXO blockchains such as Bitcoin and Cardano. Instead of showing the returned amount as a transfer, it is recorded as a receive and the crypto receives a new cost basis as if it were just purchased. This causes incorrect capital gains calculations.
Example, in the UTXO model, a wallet could send an amount of crypto (ADA, BTC) as payment to another address, but any unspent amount less than x could be returned to the original sender. For example, if the sender sent 100 ADA as payment for something, but only 60 ADA was actually spent, the sender would receive the 40 ADA back into another wallet within their HD wallet. Effectively, there are two transactions: 60 ADA was spent and 40 was 'transferred' to another wallet of theirs.
The expected CoinTracker behavior would be to create a send transaction for 60 ADA (so that only the 60 ADA triggers a taxable event) and create a transfer transaction for the 40 ADA that was returned. The amount return should retain its original cost basis and age for short/long term gains calculations.
If you wish to make manual modifications to correct this, you'll enter two transactions and add the correct tags for send and transfer:
- A send transaction for the original amount.
- A transfer transaction for the unspent amount that is received back to your wallet address.
This has been escalated to our engineering team for review, we will update this post once a fix is deployed.
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Sam - CoinTracker
Merged in a post:
Insufficient balance error is display on BTC due to Change Address
C
CT-RQWo03WQ
Hi - For certain transactions, the sent amount is showing as twice as much as it really was. The transaction in the picture was only 0.02818799 BTC. However, because of the change address it is showing up as 0.05650649 BTC and leading to an Insufficient Balance error.
Sam - CoinTracker
Merged in a post:
change address not handled
C
CT-RQWyJmyO
When a BTC transaction occurs with, for example, one input and two output, and the input and one of the outputs (the change address) are both owned by the account, it shows up as two transactions, one spending the full amount, then another "income" for the change that came in. Marking both as a transfer would not result in the correct accounting since the amount "spent" would not be accounted for in terms of gain/loss
Sam - CoinTracker
Sam - CoinTracker
Hello, it looks like you are being affected by the behavior in this post! I am going to merge this post into that one, keep an eye out for updates. Thank you for sharing the behavior you are seeing!
Sam - CoinTracker
Hello CT-RQWo03WQ, thank you for pointing this out! I want to understand that transaction a bit more, what kind of wallet are you using? CoinTracker supports xpub wallet addresses, it looks like you are adding individual addresses for each transaction.
I would be curious if this behavior is persistent with xpub addresses. I have not seen reports similar to this so I would love to get more information.
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