I do high frequency trades but have noticed that the tax report in Koinly appears to be overestimating tax due - so I investigated some of the transactions.
I noticed that even though I am using the standard “shared pool” method, the cost basis of almost identical transactions for the same pair only 30 minutes apart showed wildly different cost basis. First showed £365 and then 30 minutes later £134… there were only two small transactions between these trades in the wallet… nothing that could explain these different cost basis… how can this happen?
Binance shows these trades as only making $5 profit but Koinly is reporting £111 and £329 profit. Something seems really wrong…
This is due to the way the share pooling works in the UK. You would be able to see how it was calculated by looking at the cost analysis.
The second transaction is probably not using the section 104 holding for the cost calculation (like the previous one) and is instead calculating costs from future transactions (30 day pool) which is why they are completely different.