You will see a warning on the Transactions page when Coinpanda detects that it appears you are selling more of a coin than you actually own at the time of the transaction.
Why does this happen?
Let’s assume you have bought 1 BTC on Kraken for $20,000. You then withdraw your BTC and deposit it into your Binance account to trade other coins later.
If you only uploaded your Binance trading history, Coinpanda will have no way of knowing how you acquired your 1 BTC on Kraken. For this reason, it will look like the BTC appeared out of nowhere, and this will be shown as a warning on the Transactions page:
Coinpanda needs to know when and how you initially acquired the BTC you sold on Binance. Without this information, there is no way to calculate the cost basis needed for tax purposes.
Coinpanda assumes a cost basis equal to zero if we are missing the purchase history of a coin sold. This conservative approach will result in higher gains (and more tax) than necessary. This is why we emphasize the importance of importing all your past transactions into Coinpanda for ALL years of trading.
This is what your transactions look like after importing the trade history from Kraken:
Most common causes
The most common causes for negative balance warnings are the following:
You haven't imported your complete trade history from all exchanges where you have bought or sold cryptocurrencies
You have connected all your exchange accounts, but not all transactions were imported due to Exchange API limitations
You have received airdrops, rewards, bonuses, interest, or distributions from exchanges that have not been accounted for
You forgot to import transactions for crypto received from mining or staking
You have received crypto as a gift and forgot to account for this
If the negative coin balance is very small, the warning trade might be caused by a rounding error and can be safely ignored
Read also:
Does this warning affect my tax reports?
Since there is no way of calculating the cost basis for the coins missing, Coinpanda will assume a cost basis equal to zero. This is the same as assuming you acquired the coins for free, meaning your capital gains will equal what you sold the coins for. In this case, you will most likely pay more tax than you should.
What happens if I don't fix these warnings?
If the missing amount is very small, it will have a negligible impact on your final capital gains, and you can most likely ignore it. A simple rounding error from an exchange can cause small negative balances.
If the negative balance is high, you should try to fix the issue first. Start by making sure you have imported all transactions from all the years you have been trading. We have mentioned some other likely reasons above.
I have many warnings for small amounts - how can I get rid of these?
Luckily, this is actually quite easy! There are several ways of doing this, but here is what we recommend:
Summarize the total amount missing from all warnings for each coin
Add a Receive transaction for each coin and the total amount on a date prior to the first warning to the generic Excel template
Import the file to a Custom wallet (or any other wallet) on Coinpanda and give the wallet a proper name, such as "Adjustments"
Voila - warnings disappeared!
Let's say that from Step 1, we would end up with these missing balances:
BTC: 0.00056 + 0.00012 + 0.0008 + 0.00012 = 0.0016 BTC
ETH: 0.0023 + 0.00044 + 0.087 = 0.08974 ETH
We will then add this to the Generic file template like this:
Can I get in trouble with the tax authority because of this?
No, you will not. As already mentioned, Coinpanda assumes a cost basis equal to zero for the missing coins. This means you will pay tax on the full amount and not get a deduction for the initial cost, which is a conservative approach.