Whats the best way to treat liquidity provision?

Tax Questions
#1

I have added some liquidity on Uniswap with a WETH-MTA pair. Uniswap gives liquidity tokens (UNI-V2) for this. I then staked those tokens on app.mstable.org/earn.

Koinly sees all of these steps as sales or dispositions, but I don’t think that is correct.

Liquidity provision isn’t a trade, as the coins aren’t sold.
Is I am not mistaken, the LP tokens are basically symbolic (zero value).

Staking the LP tokens isn’t a disposition either.

I am wondering whether I should:

a) delete these transactions for simplicity
b) manually set the LP tokens price to exactly the ACB of the WETH and MTA so that it is zero gain / loss. and create a wallet for the staked coin.
c) something else.

Anyone with tax know-how or anyone at Koinly have any suggestions?

Uniswap liquidity mining
#2

Hi, we are working on adding support for liquidity pools. For now the best option is to delete those transactions if you dont want to realize gains on them.

For staking, you can use the Rewards label to tag any staking rewards. There is no label for staking/unstaking transactions but we are looking into potential solutions for this. For now these should also be deleted.

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#3

Thanks. I’ll soft delete for now. Looking forward to seeing support for LP.

EDIT: soft delete doesn’t seem to actually remove the transaction from the calculated totals (i.e. my MTA balance is still reduced by the amount that I contributed to the liquidity pool). Does it take a few minutes to recalculate?

#4

The totals come from the balance reported by the API. If you prefer to see calculated totals then you can edit the api settings and enable “ignore reported balances”

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#5

In regards to that topic, if you manually remove the “Liquidity In” from the Koinly transaction history, what happens when liquidity is being taken out?

#6

I just manually set the LP tokens value to zero so dont have to deal the the hassle of LP tokens cost basis and crap. Also whenever i stake some coins i use the “send to pool” and when i get it back i use “receive from pool”. But sometimes koinly puts the cost basis as zero for send/receive from pool transactions. i still have to figure out why it sets them to zero. Lately we have not been getting any response from koinly support which is disappointing.

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