Handling Binance referrals for tax purposes

Referrals

Early traders of cryptocurrency had a huge benefit earning referral bonus by referring people to the exchange platforms. Tracking these referral bonuses is hard! here’s how BearTax handles these binance referrals for tax purposes without pushing you to negative balances.

If you are using Binance and an online influencer/blogger with a lot of referrals, there’s a good chance that you might see tiny portions of various coins in your balances section. These coins are your referral bonus — part of transaction fees paid by users whom you have referred. They are all minute and not recorded anywhere (except for your referral dashboard).

Once you have these referral bonuses summed up to a considerable amount, you either buy other coins with them or withdraw them to your wallets to HODL.

For the tax season, you need to consolidate all the transactions. On a general note, the other platforms can’t match such sells or withdrawals and end up showing a negative balance where “Your sells are more than your buys” and dust their hands off.

BearTax helps you identify all such transactions automatically and take your consent in assigning an appropriate source to all the referral bonuses for taxes. The referral bonuses are considered gift deposits and the cost basis would be $0.

How are these handled?

A message shows up on your “Review” screen as follows,

Following are the list of transactions for which we couldn’t find either deposits or buy orders. This could be either due to a referral bonus(Eg. on Binance/KuCoin), forked coin (Eg. BCH for BTC), generated coin for holding other currencies (Eg. GAS for NEO). Buy price for all such coins will be considered 0 as they will be considered as gifts.

If something in the list below doesn’t seem right, please contact us using the chat box at bottom right corner. We’ll be happy to assist. Please select the checkbox and submit to continue.

Once you agree to the change (by checking the box) and submit, BearTax will automatically create appropriate deposit transactions to match your sells/withdrawals, which indeed makes everything clean and calculates the gain/loss properly.




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