A Negative Balance occurs when you sell a token (in an Outgoing or Trade transaction), but at the moment of that transaction your total token balance in that Connectio, calculated as the sum of all the token's transactions up to that time, is insufficient to cover the amount.

In other words, if the system adds up all your past transactions and finds that you’re trying to spend more than what you actually hold, the balance for that token becomes negative.

In this case, the software automatically assigns a price of zero to the missing outgoing tokens, in accordance with current tax regulations.

When this occurs, the capital gain may appear higher than it actually is, because the missing portion is treated as having no acquisition cost. If all incoming transactions across your portfolio were properly imported, the gain would correctly reflect the actual cost basis of those tokens.
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This situation can occur, for example, if certain incoming transactions for that token are missing, perhaps due to incomplete data from connected wallets or exchanges, resulting in a negative balance. In such cases, any resulting capital gain may appear higher than it actually is.

You have two options:

When a transaction is imported, either manually or automatically, that represents the outflow of a token for which there were insufficient funds to cover the amount, an icon like the one shown in the image below will appear next to the affected transaction.

Hovering over the icon with the mouse will display a message informing the user about the calculation executed to determine the indicated capital gain and how to adjust it for corrections.

The message will appear as shown in the image below.

The icon is also present inside the transaction details next to the Capital gain amount