1099k and 8949 – not matching? Probably because 1099k is Gross sales and 8949 is net sales

This might be Cunningham’s Law in practice but here it goes. I’m not a tax person so do your own research.

If you received a 1099k from Gdax or Gemini or some other exchange, you might have some questions. The first thing to realize is the 1099k is only reporting sales and not purchases. So, if you bought a BTC for $10,000 each and then sold it for $10,000 and then bought it for $10,000. The 1099k will show $10,000. You actually don’t owe any taxes since $10,000 – $10,000 = $0 capital gains. So, if you are doing quite a bit of trading and buying and selling the same amount over and over, you can have quite a large number but potentially you don’t owe that much in taxes.

Here’s the next thing to know. You get all your transactions accounted for. Successfully generate a 8949 statement. Then you go to double check your numbers by summing up all the sales on the 8949 and compare them to the 1099k and they don’t match up? After struggling through this I realize it’s because the 1099K is reporting GROSS sales(price and fees) and likely your 8949 is reporting net proceeds(without the fees).

Here’s another example. An exchange charges .25% to buy or sell. You buy 1 BTC for $10,000. The exchange charges $25 for that transactions. So, your costs basis is $10,025. Now you sell that 1 BTC for $10,000. The exchange charges $25 for that transaction. So, your net proceeds is $9975. On your 8949, you’ll have $9975 for net proceeds and $10025 for your cost basis which will end up as a $50 loss. However!, the 1099k will show $10,000 for gross amount of payments compared to $9975 net proceed on your 8949.

Is there a way to show the $25 fee so that the IRS knows why your 1099k gross amount of payments doesn’t match your 8949 net proceeds?

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  1. psih128
    April 19, 2018
    April 19, 2018

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