Crypto Tax Reconciliation Services | Monaco CPA

What Is Crypto Tax Reconciliation?

Monaco CPA, a cryptocurrency tax firm in Livingston, New Jersey, provides crypto tax reconciliation services for investors, traders, and DeFi users nationwide. Led by Gregory Monaco, CPA, MBA, our firm specializes in fixing broken exchange data, reconstructing missing cost basis, and preparing IRS-compliant Form 8949 reports.

 

Crypto tax reconciliation is the process of matching, verifying, and correcting cryptocurrency transaction data across exchanges, wallets, and DeFi protocols to produce accurate tax reports.

 

Most crypto tax software relies on API connections that frequently fail to categorize internal transfers between your own wallets, exchange migrations and platform rebrands, DeFi bridge transactions, and spam token airdrops. The result? Inflated tax liabilities—sometimes showing $100,000+ in phantom gains when you actually lost money.

 

Monaco CPA fixes the underlying data, not just the forms.

Common Reconciliation Errors We Resolve

The "Zero Basis" Error

Your tax software shows 100% gain because it missed your original purchase on a different exchange. Example: You bought Bitcoin on Coinbase in 2021, transferred it to Kraken, then sold—but Kraken has no record of your purchase price. The system reports the entire sale as taxable gain.

 

Our Fix: We trace your original acquisition using blockchain forensics and exchange CSV exports to establish your actual cost basis.

 

The "Transfer as Sale" Error

Moving ETH from Gemini to your Ledger hardware wallet is treated as a taxable sale because the software didn't recognize the self-transfer.

 

Our Fix: We identify matching deposit/withdrawal pairs across platforms and reclassify non-taxable transfers.

 

The "DeFi Bridge" Gap

Bridging assets (Ethereum → Arbitrum, for example) is misread as selling one asset and buying another, triggering phantom capital gains.

 

Our Fix: We analyze on-chain data to prove token continuity across Layer 2 bridges.

 

Spam Token Inflation

Your portfolio value is inflated by millions due to scam airdrops priced incorrectly by APIs.

 

Our Fix: We identify and exclude valueless spam tokens from your taxable transaction history.

 

Exchanges and Platforms We Reconcile

Monaco CPA has reconciliation expertise for major cryptocurrency exchanges:

• Coinbase & Coinbase Pro: "Pro" to "Standard" internal transfers misclassified — Transaction matching and reclassification

• Binance / Binance.US: Missing 2017–2018 legacy transaction history — CSV reconstruction and blockchain tracing

• Kraken: Margin trading duplication and staking errors — Ledger reconciliation and position analysis

• KuCoin & Gate.io: API failures requiring manual CSV imports — Direct file processing and validation

• Cash App & Robinhood: "Walled garden" activity not syncing with other platforms — Cross-platform portfolio consolidation

• Hardware Wallets: Ledger, Trezor transactions without exchange records — On-chain forensics via Etherscan/Solscan

 

2025 Regulatory Update: Form 1099-DA

Starting in 2026 tax year (for transactions occurring in 2025), cryptocurrency exchanges will issue Form 1099-DA to report digital asset sales to the IRS.

 

Critical: Under Revenue Procedure 2024-28, taxpayers must now track cost basis on a wallet-by-wallet, account-by-account basis starting January 1, 2025. This makes accurate reconciliation more important than ever—errors cannot be easily corrected retroactively.

 

Why Cost Basis Accuracy Matters

Cost basis is the original value of your cryptocurrency at acquisition. It determines your capital gain or loss when you sell, trade, or dispose of assets.

 

Without accurate cost basis:

• Gains are overstated (you pay more tax than you owe)

• Losses may be missed (you forfeit legitimate deductions)

• IRS audit risk increases (unexplained discrepancies trigger scrutiny)

 

Monaco CPA establishes defensible cost basis using exchange transaction exports (CSV/API), blockchain explorer verification (Etherscan, Solscan, Arbiscan), bank and wire transfer records, and email purchase confirmations.

 

DeFi Transaction Reconciliation

Decentralized finance (DeFi) creates unique tax reporting challenges. Every interaction with a smart contract—staking, providing liquidity, swapping tokens, claiming yield—can trigger a taxable event.

 

Monaco CPA reconciles complex DeFi transactions including:

• Liquidity Pool Deposits/Withdrawals: Tracking impermanent loss and LP token basis

• Yield Farming Rewards: Identifying income recognition timing

• Token Swaps: Calculating gain/loss on each exchange

• Wrapped Tokens: Establishing basis continuity (ETH → wETH)

• Airdrops and Forks: Determining fair market value at receipt

 

Learn more about DeFi Tax Services →

 

Our Reconciliation Process

1. Data Collection: We gather all exchange CSVs, wallet addresses, and API connections

2. Software Processing: Transactions imported into Koinly, CoinTracker, CoinLedger, or ZenLedger

3. Human Forensic Review: Our team manually identifies and corrects misclassified transactions

4. Blockchain Verification: On-chain analysis confirms transfer matching and cost basis

5. Form 8949 Preparation: Audit-ready capital gains report delivered for filing

 

Frequently Asked Questions

Can't I just use Koinly or CoinTracker myself?

Crypto tax software works well for simple portfolios with one or two exchanges. However, if you're active in DeFi, use multiple exchanges, or have transaction history from closed platforms (FTX, Celsius), the software requires expert oversight. We clean the data before it enters the software—"garbage in, garbage out" applies here.

 

What if I lost data from a closed exchange like FTX or Celsius?

We help reconstruct your cost basis using blockchain deposit records, bank statements, and email confirmations. This creates a defensible estimate for IRS purposes. Complete reconstruction is possible in most cases.

 

How much does crypto tax reconciliation cost?

Pricing depends on transaction volume and complexity. Contact us for a custom quote based on your specific situation.

 

Fix Your Crypto Tax Data Before April 15

Stop stressing over broken APIs and inflated tax bills. Monaco CPA reconciles your accounts and delivers accurate Form 8949 reports.

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Schedule a Consultation →

 

Phone: (862) 320-9554
Email: Greg@MonacoCPA.CPA
Location: Livingston, New Jersey (serving clients nationwide)

 

© 2025 Gregory Monaco, CPA LLC. All Rights Reserved.

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