r/CryptoTax • u/mini_miner1 • 8d ago

Coinbase reporting cbETH income on 1099-MISC, but there is no income

My 2025 1099-MISC shows "other income." I think this is an incorrect reporting because I don't receive staking rewards from cbETH. The price of cbETH just increases as Coinbase itself stakes, and I don't receive any additional cbETH from staking. My total cbETH is 100% exactly the quantity that shows in my purchases. On their Tax page, it shows that I'm consistently receiving "CBETH income earned"

Anyone know about this? Should I just file my taxes and ignore the 1099-MISC or ?

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u/AurumFsg-CryptoTax 8d ago

Dont ignore. Use a software add your transactions history there and see if you are genuinely receiving cbETH or not

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u/mini_miner1 7d ago

Thank you I've added up every single line manually and it came exactly equal to only quantities I've purchased.

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u/moonscape_dyor 7d ago

Don't ignore it. The IRS got the same 1099-MISC, so if that income never shows up on your return their matching system will eventually send you a CP2000 notice.

First check whether you really got nothing. Pull the full transaction history CSV from Coinbase (not the tax page summary) and look for any "Staking Income" or reward lines in cbETH or ETH. If you ever had ETH staked on Coinbase before it became cbETH, those rewards were real income and the form might be right.

If the quantity genuinely never changed, the rising cbETH/ETH rate isn't income to you. It's just unrealized gain, and it gets taxed when you sell (proceeds minus what you paid).

If the form is wrong:

  1. Ask Coinbase support for a corrected 1099-MISC. Worth a try, but don't count on it being fast.

  2. If you have to file without a correction, report the 1099-MISC amount on Schedule 1 line 8z, then enter the same amount as a negative on 8z with a note like "1099-MISC issued in error, no rewards received". Net effect is zero, but the IRS sees you accounted for the form.

Keep that CSV showing your cbETH quantity never changed, that's your backup if they ever ask.

Not a CPA, but this is the standard way to handle an info return you disagree with.

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u/mini_miner1 7d ago

Thank you! Yes I've added everything up manually, and it's 100% the exact quantity that I've purchased. Never received anything more.

In addition, even when adding up all the numbers from the activity on the Tax page, it's roughly half the amount that appeared on the 1099-MISC. Once again, thank you. I don't know how this isn't an issue that affects others and is widely complained about. I was able to find another post about it from 3 years ago.

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u/Will_Koinly 7d ago edited 7d ago

cbETH accrues value instead of paying new tokens, but Coinbase's position is that holding it is still income, which explains the form. IRS hasn't ruled yet, but don't ignore it- they get a copy. Worth a CPA call

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u/mini_miner1 7d ago

Thank you, what a pain! It would be double taxed if the amount here is valid. Additionally, when I add up the activity on their tax page, it only adds up to about half of the 1099-MISC. I don't know why this isn't a widespread and widely complained about issue.

If I'm getting double taxed, I might as well just hold regular ETH.

Thank you again!

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u/chainglance_cm 6d ago

Coinbase's logic is probably that the staking yield accrues to you through the cbETH exchange rate, even though your token count never changes. Whether that counts as income before you sell is genuinely unsettled, so they're reporting the conservative version.

You can ask Coinbase for a corrected form, which is slow but cleanest. Or report the amount on Schedule 1 and back it out with an offsetting entry and a short explanation, so the IRS matching sees you addressed it.

If you end up accepting it as income, add that amount to your cbETH cost basis so you don't get taxed on the same gain again when you sell. Koinly or Bitcoin.Tax let you tag it that way, but get a CPA if the number is big.

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u/mini_miner1 5d ago

Thank you! What seems to have happened is Coinbase increased my cost basis on their tracking at the cost of the income. So, it seems like less hassle to just accept the income and take the higher cost basis. Not ideal, but not worth potentially fighting over. Thank you again.