Describe the problem:
Transaction tagged as Cost shows Profit
Which exchange/wallet is this regarding?
Ethereum Wallet
How did you import data into this wallet?
API
What have you tried to fix this so far?
Re-import
See screenshot:-
Why does a cost to send a transaction show as a profit?
It would be nice to be able to choose whether or not to calculate a profit on these transactions, my accountant says that currently expenses made directly in cryptocurrency (i.e. without automatic conversion) are not calculated as a capital gain.
In tax report, on the right side, you have the option to change that. Click here in the setting section, you’ll se the option.
Thank you! I missed it.
So, shall the “Treat transfer fees as disposals?” be checked or unchecked to not calculate gains?
As for the reason, it’s because it is considering the capital gain on the crypto “sold” to pay the fees. So if you bought ETH at $1000 then you use it to pay a fee when it is worth $1500, you’ve made a gain in the process.
If you disable the profit calculation on a fee payment, it then considers that gain against any future sale of a token instead of at the time of the cost.
Hello, I just purchased this software and finding my way around it. I would expect to see two calculations for the fee that was paid by crypto currency in the sale transaction, because there are 2 potential taxable events in there. The1st is that the fee in crypto currency would be added to the cost basis (at the current value of that currency), which ultimately reduces the capital gain on that sale. 2nd- using this currency to pay a fee would be considered disposal of the currency (so will be a taxable event). Does the software calculate both “events”? Thanks!
I agree with Sandra. I would expect in this case the £4.94 to be classified as a cost, and as such taken off my capital gain. Separately, I don’t understand how it’s a profit at all though, ultimately I am no longer in ownership of the Ethereum and I haven’t gained any money, in fact I have just paid a higher cost now than the cost it was to transact previously, so in effect the actual cost to me is £9.37.
Any update on those Questions?
I had initially the same concern of showing gain on fees for my transfers/trades and could not make much sense out of it, but I think what Koinly is doing right. Heres is an example to make better sense of it:
Disclosure - I am located in USA and using FIFO - First in First out (IRS mandated) way of calculating taxes.
Lets say I bought 1000$ worth of ETH @ 100 $/ETH = 10 ETH
Next I bought 2000$ worth of ETH @ 200 $/ETH = 10 ETH Total Balance = 20 ETH
Now I sell the 15 ETH @ 300$/ETH and Fee Paid in ETH is 1 ETH (for example)
Than My gain will be calculated as such:
(100x10 )+ (200 x5)= 2000 $ Cost Basis. ( First 10 ETH pulled from FIRST buy and 5 ETH pulled from SECOND buy)
What I got 300x15 = 4500 $ ( sell value of ETH)
1 ETH paid in fee = 300 $ ( As FIFO method cost basis of this 16th ETH will be 200$) so
Gain on fee = 300 - 200 US = 100$
Net Gain is = 4500 - 2000 - 300 + 200 = 2300 $. ( Including fees in gain calculation as @ Sandra explained In below post )
You can make a case that you didnt sell it and paid as fee but as you can see its USD value is more than what you actually paid for. For example lets say you still need to pay 300$ worth of transaction fee in ETH but ETH value now is actually 250 $ only (from above example) than you would have required to pay 1.2 ETH (300/250) in transaction fee. So although you are not liquidating your crytpo Koinly will always find its USD value based on Cost basis method for gain/loss calculation.
You need to add $300 fee to your cost base. This will reduce your gain from the sale to $2,200. Then you calculate the gain on disposing of 1 EHT to pay the mentioned fee: $300-$200=gain $100. So, together you should see a gain of $2,300 from this sale transaction