That’s a very good question. Tax calculations for providing/removing liquidity present some challenges for various reasons:
- Multiple tokens are part of the same transaction/trade (eg: token A + token B sold for token C)
- There are thousands of different LP tokens with the same symbol/ticker that must be identified and considered separately when disposing of those tokens later (when removing liquidity).
- Some pools don’t have linear collateral, meaning you might deposit 20% USDC and 80% ETH instead of 50-50 which is the most common
The short answer to your questions is that we don’t yet have full support for handling LP tokens for all the different platforms and protocols, but our developers are currently working on a big upgrade to this that we expect will be completed sometime next month.
Instead of importing Sent A + Sent B + Received C as you said, we will import two trade transactions this way assuming the collateral is 50-50:
- Token A → Token C (50%)
- Token B → Token C (50%)
Token C will be automatically identified from the contract address so that all LP tokens are tracked individually. When you later remove liquidity, you will see two trade transactions again
- Token C (50%) → Token A
- Token C (50%) → Token B
… where we will calculate the realized gain/loss for token C disposed of based on the current market rate for Token A + Token B.
In other words, this process should be 100% automatic and there is nothing for you to change/edit manually as long as the LP token is recognized from the contract address. We will need to add all contract addresses to our database for this to be identified automatically.
In case you see a Send + Send + Receive (like now) it means we have not yet added the contract address. If you see this, just send us a message and we will add the address to our database of LP tokens. Instead of deleting + reimporting all transactions, you will be able to merge the Send + Send + Receive into two Trade transactions with a few clicks.
We will publish several blog and help articles that explains this in much more detail as soon as the update is completed and goes live. Just wanted to give you a small “teaser” of what you can expect in the near future.
Don’t hesitate to reply back if you have any questions or suggestions related to this.