Transferred bitcoin from crypto wallet to Robinhood - 1099 shows undetermined uncovered sale with $0 basis

Thanks for explaining! So basically Robinhood is just saying "we don't know what this person paid originally" and the IRS won't automatically assume I owe taxes on the full $30k? Also, what happens if I can't find my original purchase records? My old exchange closed down.

The IRS doesn't automatically assume anything - it's your responsibility to report the correct information on your tax return. When you file with the correct basis, you're telling the IRS "the 1099 is incomplete, here's the actual information." If you can't find your original purchase records, you should try to reconstruct them as best you can. Look for bank statements showing transfers to the exchange, email confirmations, screenshots you might have saved, or even price histories to estimate when you bought. If your exchange closed down, check if they sent you any final transaction reports. In the worst case, you may need to make a good faith estimate, but be aware this could be questioned in an audit.

Does it work with other crypto exchanges too? I've got stuff spread across Coinbase, Binance, and a hardware wallet. Tax season is giving me a migraine.

I'm skeptical about these AI tools. How does it actually know your original cost basis if Robinhood doesn't? Sounds like you still need the original documentation either way.

Yes, it absolutely works with all major exchanges! You can connect multiple exchange accounts or upload statements from Coinbase, Binance, Kraken, etc. It reconciles everything across platforms and identifies transfers versus actual sales. Regarding documentation, you're right that you need something to establish cost basis. The AI doesn't magically create data that doesn't exist. What it does is help you properly document what you do have and fill out the correct forms. It can also help with methods to reconstruct missing data based on transaction timestamps and historical prices. The real value is in preventing the common mistake of double-counting or treating transfers as taxable events.

Wait, how does this even work? The IRS phone system is notoriously impossible to get through. Are you saying this service somehow jumps the queue?

This sounds like a scam. Nobody can get the IRS on the phone that quickly. If it were possible, everyone would be doing it. Plus, why pay for something you can do yourself for free?

It doesn't jump the queue at all. The service basically calls the IRS and navigates the phone menu system for you, then waits on hold so you don't have to. When an IRS agent finally picks up, the system calls your phone and connects you directly to the agent. No, it's definitely not a scam. It's just a time-saving service. The reason everyone isn't doing it is simply because many people don't know about it. And yes, you can absolutely do this yourself for free if you have hours to wait on hold. I personally don't, so I found the service valuable. For something as important as confirming the proper tax treatment of crypto transactions, it was worth it to get definitive answers directly from the IRS.

I tried a couple of those services but they seemed to have trouble with my specific situation. Do they handle the "undetermined uncovered" classification properly? And can they retroactively figure out my basis if I've already received the 1099 with incorrect info?

Yes, they can definitely handle your situation. The "undetermined uncovered" classification is just Robinhood's way of saying they don't have your cost basis information. These tracking tools let you import data from all your exchanges and wallets, then reconcile everything to identify your true cost basis. They can absolutely work retroactively. You'd import your historical data from wherever you originally purchased the crypto, and the software would match up the transfers to establish the correct cost basis. Just make sure you have access to your transaction history from your original purchase platform. Even if you've already received a 1099 with incorrect info, the software will generate the proper 8949 form with the correct basis information for your tax filing.

I was audited last year for exactly this issue. As long as you have documentation of your original purchase price, you'll be fine. The auditor understood that basis reporting for crypto is often incomplete. Just make sure you check the right box on Form 8949 to indicate you're correcting the basis info.

This is incredibly helpful! I'm dealing with a similar transfer situation and was worried about the documentation requirements. When you say "transaction hashes for the transfer" - where exactly do you find those? I transferred from my hardware wallet to Robinhood and I'm not sure if I saved that information. Also, did you have to provide all that documentation upfront with your tax filing, or just keep it in case of questions later?

@c6c4ccd37dc1 For transaction hashes, you can usually find them in a few places: 1) If you used a hardware wallet like Ledger or Trezor, check the wallet software's transaction history - it should show the hash for outgoing transfers. 2) You can also look up your wallet address on a blockchain explorer like Etherscan (for Ethereum) or Blockchair and find the specific transaction there. 3) Some exchanges also provide transaction IDs in their withdrawal confirmations. You don't need to submit all the documentation with your tax return - just keep it organized in case the IRS asks for it later. I literally just filed Form 8949 with the corrected basis and a note that documentation was available upon request. The key is being able to quickly produce a clear paper trail if needed. Even if you don't have the exact transaction hash, bank statements showing the timing of your original purchase plus screenshots of your wallet balance before/after the transfer can help establish it was a legitimate transfer rather than a sale.