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Why are the proceeds from sales and acquisition costs so high?
Why are the proceeds from sales and acquisition costs so high?
Written by Eivind Semb
Updated over a week ago

You might have noticed that the "Proceeds from sales" and "Acquisition costs" in your tax report can be a lot higher than your realized gain/loss and total portfolio value. This is usually completely normal and expected, especially if you have done a lot of trading during the tax year since.

The proceeds and acquisition costs are calculated for each taxable transaction. The more frequently you trade or the more taxable transactions you have, the higher the values become.

Let's say that on January 1st, you bought 1 BTC worth $20,000. You then go on to make 50 trades of your entire portfolio (consisting of 1 BTC) during the tax year from January 1st to December 31st. Assuming that your BTC value stays constant and the price of BTC is $20,000 throughout the year, for simplicity, your portfolio value will still be 1 BTC = $20,000 after making 50 trades.

Your proceeds and acquisition costs will now be approximately $1,000,000 even though your net capital gain is zero and your total portfolio value at the end of the tax year is still only $20,000. Therefore, the proceeds and acquisition cost can be considered a measurement of your total trading volume, which, in this example, is 50x of the total portfolio value.

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