How do fees for Trades, Transfers, Sends, etc, impact my capital gains?
Fees play a role in determining the cost basis and proceeds of your crypto transactions, which affects the ultimate calculation of capital gains or losses.
Generally, fees are considered as disposals of an asset and are thus taxable events. These disposals can generate either a gain or loss, and CoinTracker includes these in your tax calculations.
Examples of Fee Calculations
Transfer Example: Transferring Ethereum with a Gas Fee
Scenario: You transfer 1 ETH and incur a 0.1 ETH gas fee.
Cost Basis and Market Value:
- The cost basis of the 0.1 ETH fee is $10.
- The market value of 0.1 ETH at the time of the transfer is $30.
Calculations:
- Original cost basis of 1 ETH before it was transferred to another wallet: $1,000.
- Gain on the 0.1 ETH used as a gas fee for the transfer: $20 ($30 market value - $10 cost basis).
- New cost basis of 1 ETH after the transfer transaction: $1,030 ($1,000 original + $30 added from the fee's market value).
Trade Example: Proceeds When Selling Ethereum with a Gas Fee
Scenario: You sell 1 ETH for $1,000 and pay a $30 gas fee.
Proceeds Calculation: Net proceeds from the sale of 1 ETH: $970 ($1,000 - $30 gas fee).
Example 3: Buying Ethereum with a Gas Fee from Existing Holdings
Scenario: You purchase 1 ETH for $1,000 and pay a 0.2 ETH gas fee from an existing lot of ETH your are holding.
Cost Basis and Market Value:
- The cost basis of the 0.2 ETH fee is $10.
- The market value of 0.2 ETH at the time of the transaction is $60.
Calculations:
- Cost basis of 1 ETH: $1,000.
- Gain on the 0.2 ETH used as a gas fee: $50 ($60 market value - $10 cost basis).
- Total cost basis after the transaction: $1,060 ($1,000 original + $60 added from the fee's market value).
Examples of How CoinTracker Handles Fees
Example: Fee in the Same Currency as the Outgoing Asset
Details: When the fee is in the same currency as the outgoing asset, the total disposed amount is the sum of the outgoing amount and the fee.
Calculation: Total USDC disposed = Outgoing amount (100 USDC) + Fee (1 USDC) = 101 USDC.
Example: Fee in the Same Currency as the Incoming Asset
Details: When the fee is in the same currency as the incoming asset, the total amount received is the incoming amount minus the fee.
Calculation: Total BTC received = Incoming amount (1 BTC) - Fee (0.001 BTC) = 0.999 BTC.
Example: Fee in a Different Currency from the Transacted Assets
Details: When the fee is not in the same currency as either the outgoing or incoming asset (e.g., BNB used as a fee on Binance), the fee is treated as a separate disposal.
Calculation: In an example where 1 BTC was sold for $1700 USD with a .002 BNB transaction fee:
- Total BTC disposed: 1 BTC.
- Total USD received: $1,700.
- Total BNB disposed as a fee: 0.002 BNB.
Why don't I see a fee on my BTC transactions?
For some BTC transactions, many transfers can be bundled into a single transaction. In these cases it is not always possible for CoinTracker to tell how much of the fee each individual wallet paid.
In these cases, the fee is automatically deducted from the amount received (and it won't be in the "fee" column.)
Disclaimer: This post is informational only and is not meant as tax advice. For tax advice please speak with a tax professional. See our full disclaimer by clicking here.