Newbie here.
Copying and pasting that which startles me:
Summary: You transferred 0.0005 ETH from Ledger to Binance and paid a transaction fee of 0.002415 ETH (worth SEK 33.53) on top. Your cost-basis for the 0.002415 ETH transaction fee has been calculated using ACB (universal). Your final capital gain for this transaction is SEK 16.63.
How the heck am I making “gains” on transaction fees? What am I missing?
Thanks.
You bought your ETH lower than the price the day you made this transaction, hence you made a profit.
Go to settings and uncheck Realize gains on crypto → crypto trades? if you’re not concerned by this setting.
Sorry, but to clarify, I only transferred my ETH from Ledger to Binance and I paid a tx fee for it. I didn’t make any trades.
In my newbie’s mind, not only have I lost money on the “transfer” fee from wallet to wallet without gaining more ETH, but now I will also need to fork out even more money for Mr.Taxman to take from the profits I have never made to begin with.
Basically, I’m trying to understand why it makes sense that you are making capital gains and paying taxes on them when paying tx fees for transferring coins between your own wallets?
Because you paid for the transfer fee in Ethereum and the transfer fee is classed as disposal so if the ETH has gone up in value you will have made a gain.
Simple example lets say fee was 0.0005 ETH and you originally bought it for $10, when you come to pay transfer fee of 0.0005 and its worth $30 the you will have made a capital gain of $20.
If you ran the Koinly full tax report on page 3 there will be a summary of expenses which includes Transfer fees for the year, these have not been offset against capital gains(screen shot attached).
I’m not sure if they are an allowable expense in your country but in the UK they are so I manually reduce my capital gains for the year by the amount of transfer fees.
I did submit a request for Koinly to add a feature to give us the option/setting to offset the transfer fees against the capital gains automatically but so far no response and they probably far too busy fixing bugs and implementing features that they consider more important,
This would be great to be automated. What is the best method to do manually. Do you suggest modifying the cvs file and modifying the transactions , adding one summary cost, or other method
There shouldnt be a gain on self transfers period (Eth to Eth with a fee is a loss every time).
Same issue for me with regular trades as well. I dont think the transactions are including the fees. It wont let me add tokens in the box after selecting “edit” then “+Fees”. It just stays greyed out. I dont think the transaction fee is calculated anywhere earlier either because the system thought the trade was a “deposit”. So i change it to “trade” and it still wont let me put in the right data. Am I suppose to just add up the trade minus the fees and put that number in the “Net Worth” -total trade value?
When you pay a transfer fee you are “selling” the amount of crypto that you used to pay the fee. Any time you pay a fee with crypto you are disposing of or “selling” the crypto so you should see a capital gain or capital loss in your Koinly reports. This is the correct treatment in most jurisdictions.
The treatment of transfer fees as a deductible expense or a chargeable cost has been discussed a number of times in other posts. A conservative view is that transfer fees are only deductible when the transfer is made for the purposes of earning income. In this case they are deductible as a business expense. If the transfer is not in furtherance of a business purpose, an aggressive view would argue for deducting the transfer fees from capital gains on the basis that they are a chargeable cost. The tax position is dependent on jurisdiction and the guidance of the tax authorities on point, if any.
For crypto to crypto trades, Koinly usually adds the transaction fees (e.g. gas) to the cost base of the crypto being disposed of, i.e. if you are trading ETH for DAI and paying the tx fees in ETH, then the tx fee is added to the cost base of the the disposed ETH for purposes of calculating the capital gain or loss. If the crypto traded is different from the crypto used to pay the tx fees then Koinly will add the tx fee to the cost base of the acquired crypto. For example, if you are trading DAI for ETH and paying the tx fees in ETH then you should see the tx fee added to the cost base of the ETH you acquired. You can see this in the Cost Analysis summary and table below each transaction.
There are a number of Koinly Blog Posts and Help articles on the subject of transaction fees. Here is one may be helpful.
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