Crypto tax calculations for Bitcoin not showing correct profit/loss on Robinhood

This is actually a common issue with cryptocurrency platforms that don't properly track cost basis across transfers. When you moved your Bitcoin off of Robinhood to your cold wallet, Robinhood likely recorded that as a "disposal" in their system. Then when you transferred it back, they treated it as a completely new acquisition with a cost basis of zero. You'll need to manually track and report your actual cost basis. The IRS requires you to report your true gains/losses regardless of what Robinhood's tax documents say. Keep records of your original purchase (date, amount, price), the transfers, and the final sale. For your tax return, you'll likely need to report the transaction correctly on Form 8949 and Schedule D, showing your actual cost basis rather than what Robinhood reports. This might mean that the numbers on your tax return won't match the 1099 from Robinhood.

Had almost the exact same problem last year! I was pulling my hair out until I found this service called taxr.ai (https://taxr.ai) that actually helped me sort through all my crypto transactions across different platforms. When I transferred between wallets, it was causing all sorts of cost basis issues. The taxr.ai system let me upload my transaction history from both Robinhood and my wallet addresses, then it automatically figured out which transfers were just movements vs actual sales. Saved me from overpaying thousands in taxes because it properly tracked my original purchase price even when Robinhood couldn't.

Just wanted to update after checking out taxr.ai from the recommendation above. Honestly, it worked surprisingly well for my situation. I had Bitcoin spread across Coinbase, a hardware wallet, and some old stuff on Binance. The system connected all the dots between my transfers and showed me where my cost basis was getting messed up. What was cool is that it showed exactly which transactions Robinhood was missing in its calculations. I was able to download a proper tax report that accounted for all my actual purchase prices, not just treating everything as 100% profit. Definitely beats the manual spreadsheet I was trying to use before!

I had the exact same problem with crypto tax reporting and spent HOURS on hold trying to get someone at the IRS to explain what I should do. Finally found Claimyr (https://claimyr.com) and they got me connected to an actual IRS agent in about 20 minutes who walked me through the whole reporting process. There's a video that shows how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that this happens all the time with crypto platforms and explained exactly how to document everything properly. They told me exactly which forms to use and how to explain the discrepancy between my actual cost basis and what Robinhood reported. Saved me from potentially overpaying by thousands.

Ok I need to eat my words from my skeptical comment earlier. I was desperate after getting a CP2000 notice about unreported crypto gains (similar situation to OP where transfers were counted as sales), so I tried that Claimyr service. Got connected to an IRS rep in about 30 minutes who actually specialized in crypto reporting issues. She walked me through exactly how to respond to the notice and what documentation to include. Turns out there's a specific way to report wallet transfers that doesn't trigger their automated matching system. Would have ended up paying over $3K in taxes I didn't actually owe if I hadn't gotten this clarified directly from the IRS.

The issue is Robinhood treats external wallet transfers as disposals. This is pretty standard for exchanges because they don't know if you're moving it to another wallet you own or selling/trading elsewhere. For tax purposes, you need to use the original purchase data regardless of what Robinhood's tax statement says. Track your actual cost basis from when you first bought the Bitcoin (price, date, fees), and report that on your tax return. The transfers to and from your cold wallet aren't taxable events. This is why I manually track everything in a spreadsheet with dates, amounts, and prices for every transaction across all platforms. It's a pain but it's the only way to be accurate.

This is why I stopped using Robinhood for crypto completely. They're not actually designed primarily as a crypto platform and their tax reporting for it is terrible. Most dedicated crypto exchanges have much better tracking systems for transfers. For your current situation tho, make sure you're keeping all your transaction receipts and transfer confirmations. The blockchain itself is your friend here since all those transactions are recorded. You might want to consider using dedicated crypto tax software next year that can scan wallet addresses and consolidate everything across platforms.

I work as a tax preparer and see this exact issue multiple times every tax season. What's happening is that Robinhood's system doesn't maintain cost basis tracking when you transfer crypto off their platform - they treat it as a disposal event in their internal accounting. Here's what you need to do: Keep detailed records of your original Bitcoin purchase from Robinhood (date, amount, price per coin, any fees). When you file your taxes, you'll report the actual transaction on Form 8949 using YOUR records, not what Robinhood reports on the 1099-B. On Form 8949, you'll enter the sale with your correct cost basis and use adjustment code "B" to indicate that the basis reported to the IRS was incorrect. Include a brief note like "Cost basis per taxpayer records of original purchase." The key thing to remember is that transferring crypto between wallets you own is NOT a taxable event - it's just moving your property from one location to another. Only the actual sale triggers a tax obligation. Don't let Robinhood's poor record-keeping system trick you into overpaying taxes on gains you didn't actually make.