How to classify when lended money is payed back?

I see that I can classify an outflow as “lending” which is when the asset is given away. But how do I classify when the lended asset is payed back? It isn’t “lending income” because it isn’t the reward but merely the returned asset.

Does this help?

Here is the breakdown of classifications: Crypto Tax Classifications : Accointing AG
Here is how you are taxed per classification: You searched for classifications - The Hub on ACCOINTING.com

I have read the classification breakdowns before creating this post. Those are the two with “lending” in their text:

Lending Income: If you lent out your crypto and earned interest.

Lending: Funds that you sent out to a lending protocol or are using to lend out on a centralized platform.

Both do not find the “paypack” of the originally lended asset (the income is in a different currency).

1 Like

I believe the answer to your question is the same answer I would give for staking. I will double-check with the team.
This is what I normally would say for staking.


Hey guys! I understand your frustration with the staked and staking classifications so just to clear this out from our standpoint:

all tokens that were staked=do not classify
all tokens that came as a reward for staked tokens=staking

The reason why we don’t have more strict guidelines is because there aren’t any and they are subject to the interpretation of the different jurisdictions. That bein said, here is an article from Bloomberg providing further context on the matter:

Now, the lender could be considered to have converted their crypto for another crypto when they “stake” their money into the liquidity pool and received another token they can sell elsewhere. That is a taxable event, so in this example, just as dividends are taxable, so are tokens generated from staking activities.

However, it’s not as straight-forward as that because this transaction can also be viewed in another way; in that what the lender deposited in the liquidity pool is still their money and the tokens they receive in exchange is nothing more than a receipt. That means it is not a taxable event.

Meanwhile, on the borrower’s side, it can be argued that depositing collateral and receiving a loan in a different token form is akin to an exchange transaction, so a taxable event. Of course, usually taking a loan is not a taxable event. However, the transaction on a DeFi is unique. Unlike conventional loans, it includes depositing one currency as collateral to receive a loan in another.

If you need any tax assistance with your crypto taxes, make sure you visit ACTAN in the Hub where any of our crypto tax professionals can help you out.

Hey @Matt, thanks for the clarification. I’m assuming you’re saying the staked +staked rewards should be listed as separate ‘deposit’ transactions. Unlike withdraw, there isn’t an option to add fees for deposit. How would you account for fees?

1 Like

We have a fee section while manually creating a transaction or you can manually add the fees by creating a manual withdrawal and classify it as a fee :slight_smile:

Check out some Staking Articles in The Hub:

Here is the breakdown of classifications: Crypto Tax Classifications : Accointing AG
Here is how you are taxed per classification: The Hub: Crypto and Bitcoin Tax Blog | ACCOINTING.com

If I would add a separate ‘deposit’ transaction for the ‘payback’ of originally lent assets, the price of that asset is different to the price at the time I originally bought/traded it.
So when I realize my assets the calculation for the profit I have to pay tax for is wrong.

Since you were paid back the same amount of coins, is this like a refund?
Could you not just ignore the transaction that you lent? Or change the “deposit” transaction to be at the same time as it was sent?

Or some OTC transactions? Over-The-Counter (OTC) Transactions - The Hub: Crypto and Bitcoin Tax Blog | ACCOINTING.com

Let me ask someone and get back to you.
What country are you guys in?

right now, I just ignored the transaction, just as I never ‘lent’ something. but I am not sure what a tax account would say to that. I am wondering, why Accointing would provide an option of “Lending”…

I am from Austria.

by the way, and I know there is a delay in that feature, it is really really important for users to manually add token/coins. otherwise I cannot do my tax-report for this year in 2022 right in time, just like many other users. I already paid for a license here at ‘Accointing’ as I really like the style and the way one can manage crypto transactions. also how the voting for new features is handled. but it would be lost money if I cannot do the report next year, in time. so in my opinion, features like “support of terra”, “Ronin Wallet” and so on are important, but not crucial for a tax report. the tax report is what this tool was made for. :neutral_face:

Hey guys we are doing some tax research and such around the topics of loans. If you have a CPA, please ask them about your situation.

Can‘t you handle it as „remove funds“ (Mittel auszahlen) for lending and „add funds“ (Mittel einzahlen) when money is paid back. The interest you receive for lending can be separately marked as „lending income“.

Opposite way would apply for borrowing - Add funds for borrow and remove funds for repaying borrowed amount, interest payed separately shown as fee.

What do you think?

I do not think it is that simple.

Our tax experts are working on it, and I suggest holding off until we get an answer from them.

Here is the breakdown of classifications: Crypto Tax Classifications : Accointing AG
Here is how you are taxed per classification: The Hub: Crypto and Bitcoin Tax Blog | ACCOINTING.com

I’m having the same problem. How do I classify assets that I borrow from e.g. aave? And how do I classify when I pay them back?
Also pretty complicated to calculate taxes:

  • Borrowing 1 BTC = no taxes
  • Selling this 1 BTC = no taxes
  • Buying BTC lower = no taxes
  • Paying it back = taxes

At least this is how I would treat it.

What is the “lending” classification for then? Or can i think of it like a work in progress? If i compare to other platforms, i think ignoring the tx is the right move (if it’s not a taxable event of course).

The problem with this is we don’t know how to treat it. First, the assumption is that borrowing property qualifies as a loan - we don’t know this for sure because loans are conventionally an obligation to pay money, not property. So we are purely guessing how it should be. My analysis….assuming that borrowing property (crypto) is considered a loan:

  • Borrowing 1 BTC = no taxes > no different than borrowing money and assumption is this qualifies as a loan.
  • Selling this 1 BTC = taxable > this gets tricky but things are reported in USD, so even if borrowing BTC have to look at USD value. If you borrow the BTC at the time when it’s trading for $35k then sell when it’s trading for $38k, that is a $3k gain > your basis is what you borrowed it for in USD at the time of the loan.
  • Buying BTC lower = no taxes > correct, unless you are using ETH or even a stablecoin which would technically have a gain or loss (however small) on the sale of the ETH or stablecoin. But if we assume fiat, then correct.
  • Paying it back = no taxes > similar to paying your credit card back, not a taxable event as you owe this and are repaying. Now, if you pay it back with appreciated BTC, then yes, you’d have a tax based on the value of BTC (or other crypto) at the time of repayment, relative to the tax basis of that BTC (which would depend on the last step)
  • What’s tricky and we’ll not be able to separate, is the “interest” portion of each repayment for the loan.

but again, all of the above is an analysis based on my best guess if the loan is treated as a loan, how the rules would work.
As I understand, lending is for if YOU loan the bitcoin, since it is a withdrawal > not for paying it back
Lending income is for the interest income you get for the loan on the above transaction

Basically, you have to make the transactions/classifications fit the outcome you need.

I think it would be helpful if the classifications were more clearly defined by what they do from a mathematical perspective. The current descriptions are incredibly vague.

Like, I have no idea what accointing does if I classify something as “lending”. I’d assume it’s a withdraw without a taxable event (says absolutely nowhere). But why bother adding that classification if there’s no mirroring “got my money back” classification? I have to ignore the lending portion anyways, if I interpret the tax as “non taxable”.

Here is the breakdown of classifications: The Different Types of Crypto Transaction Classifications - The Hub: Crypto and Bitcoin Tax Blog | ACCOINTING.com
Here is how you are taxed per classification: https://hub.accointing.com/?s=Specific+tax+classifications&id=3300&post_type=post

Hi Matt, i don‘t understand all the tax classifications and also not your arguments.

Lending: An asset that was used to send to a lending protocol.

Ok. But there is no classification avalible on the other side, after lending period ends. How to classify to transfer the asset back to my wallet. The reward is income from lending, but the lended amount itself?

Why you dont implement a classification for that?

I don’t know if it is the right way to ignore the lending / de-lending transactions, if you ignore you may have missing funds. I unclassify all my lending / de-lending transactions as Matt recommended (like staking) because on Aave/Unilend or Curve the coins never leave my control/possession. I think it is ok to do like this, what do you guys think?

So this is a weird case as the laws are not specific in this area, though I am unsure of your country as well. Therefore it is up to the user to classify as they want depending on how they chose to treat this kind of transaction. For example, with loans, the collateral should not be taxable, therefore, it should be an internal transfer as if it was staking, but the keyword is should. if someone wants to be super conservative they could do it as a trade. Similar to a LP, you can treat as a deposit or taxable event, or as if you are staking.