Songbird Wrapping SGB for WSGB Capital Gains

Koinly Support
1

I notice that Koinly calculates a capital gain when I wrap SGB into WSGB.

All wrapped assets are not the same. Something like Wrapped Ethereum exists in order to be able to use
ETH on other chains. It trades as WETH in many markets and price deviates from ETH somewhat. Clearly it can be said that ETH & wETH are two different/separate assets in almost every way … but with SGB > wSGB you’re wrapping the asset to create a delta-neutral derivative of itself, on it’s own chain, in order to extend it’s utility on-chain, and where it doesn’t trade anywhere else. IMO wSGB is simply an internal technical device and doesn’t warrant separate treatment. And there will be people that argue against that POV, there is some argument to be made, but I think it’s a very thin one: You get 100K SGB as an airdrop; don’t want to sell, because you’re able to delegate your voting power; the SGB is now worth $30K … if you received starting from a $0 cost basis, you’re telling me I should incur a $30K capital gain just to wrap SGB? Hell no … So until the CRA ever gives any clarity on this issue - for me : SGB = WSGB.

Koinly is reporting significant capital gains that I feel are not correct. Please check into this and provide feedback and guidance.

2

I noticed this, too. Wrapping SGB does not seem like a taxable event, so I tagged them as swaps.

3

I also created CAND from SGB which probably should be a taxable event. Koinly showed no gains when I did this.

4

Any thoughts Koinly?

5

Hello!

Alex from Koinly here :slight_smile:

The reason why this is showing as a taxable transaction in Koinly is simply due to the way our system is set up to import and calculate transactions.
Since the blockchain reports one asset (SGB) being exchanged (wrapped) for a different asset (wSGB), it comes in as such in Koinly which will always treat two differently named assets as two separate currencies.
If we don’t have it set up this way it could cause more significant issues as the laws for how to treat these kind of transactions vary a lot from country to country.
So the solution you have used where you apply the “Swap” label is a good workaround for this, if your tax agency allows for these to be considered as non-taxable events.

I will definitely pass this on to our developers though to see if there’s any way to include an option to either treat them as taxable or not when setting up the wallet :slight_smile:

Thank you for the feedback, and sorry for the inconvenience!

Best regards,
Alex

6

Thanks Alex for your reply. Any comment on this quote?

7

Hi Alex,

I applied the ‘swap’ workaround for changing WSGB to SGB but it still displays a profit in the transaction.

Shouldn’t tagging it as a ‘swap’ stop this?