Gas fees causing profit

[nealo]

Hey y’all,

Just joined Koinly today and imported a ton of Metamask transactions. I live in Canada, in case that matters.

I notice that all the gas fees come up as separate transactions, and the cost basis of my ETH is compared to the value of the ETH spent on gas, and since ETH has been rising, each transaction is causing some “profit.” See the image at the bottom.

This seems wrong to me, mainly because the ETH cost is irrespective of the fiat value of the ETH. It’s denominated in ETH at all times. And it’s purely a fee.

Is this right? Or is it wrong and I need to fix it somehow?

[europa]

I agree it’s a bit counterintuitive until you get your head around it, but it’s right. It is a disposal at a higher market value than when you bought those ETH and therefore you made a profit on disposal.

However the disposal is marked as a cost, so assuming Canadian tax code allows you to offset that cost against profits elsewhere, then the tax report will do this for you.

[Dean_Connell]

I’m new to Koinly and I’ve just noticed this and thought it must be a bug. So, if the transaction is marked as ‘cost’ then we can offset this profit against Capital gains? (in the UK if that matters).

If thats the case, does the Koinly software do this automatically?
Assuming its not calculated in real time?

[europa]

I’m also in the UK. Yes, what you say matches my understanding and yes Koinly takes care of it. But I am not a tax expert.

[forest]

I agree, koinly does it correctly, you are spending your crypto on gas fees, just like buying a cup of coffee with crypto, the crypto has gone and the disposal is a taxable event.

[ContrastBlaster]

Guys, I hear what you’re saying, but I don’t think it’s as clear cut. A Koinly competitor (sorry) posted this article, stating that Gas paid for an exchange is subtracted from the gains as a cost, BUT Gas for a wallet transfer can be used to step up the basis of the transferred token. Maybe the software is accounting for this in the background, but it would be really nice to get some feedback from the Koinly team on whether these fees are being tracked properly or if more manual adjustments are needed.