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I transferred 0.2 ETH and 0.3 ETH in separate transfers from GDAX to Binance (GDAX does not charge a fee for this).

Then, I transferred back from Binance to GDAX all 0.5 ETH, but since Binance charges a 0.01 ETH withdraw fee, I now only have 0.49 ETH in my GDAX account.

Then, I sell my 0.49 ETH on GDAX.

Assuming I would like to report taxes, how do I take into account the 0.01 ETH in transfer fee assuming the following:

0.2 ETH was purchased at $100

0.3 ETH was purchased at $120

0.49 ETH was sold at $400 (within a year)

In other words, what's the best way to report these two transactions on form 8949 (https://www.irs.gov/pub/irs-pdf/f8949.pdf)?

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Grain of salt disclaimer:(Consult a professional, lawyer, accountant, doctor as I'm a computer engineer, musician, and painter I'm clearly none of those.)

Also read this https://www.irs.gov/instructions/i8949 if you need to fill out 8949.

I hope this is a clear explanation of how capital gains taxes work in general.

Here's an example of what I would do normally assuming a FIFO tax treatment:

You need to pay tax on your capital gains but you want to subtract your cost basis from the total value you sold for as the basis is not taxed as a gain. (Note that if you can't prove the cost basis I believe the entire sale of 0.49 at 400 would be considered taxable)

{sold value - cost basis = capital gain} that you need to pay tax on (income tax if under 12 months, 15% if it's a long term gain)

First find the cost basis. (0.2*100)+(0.3*120)=20+36=$56 (this is your cost basis)

(I'm going to round your 0.49 eth up to 0.50 as a clear example with round numbers)

Then compute the amount generated from the sale (I'm calling this a sold value) 0.5*400= $200 (this is your sold value in my example equation)

Now find the capital gain using the equation below: sold value - cost basis = capital gain 200-56=$144

For long term gains over 12 months it's 15% * your gain minus the cost basis

144*0.15=$21.50 due in taxes.

For short term gain (held under 12 months, as is your case) the gain is considered income.

144*your tax rate = what you owe to the IRS as this was a capital gain. This gets added to your AGI so if you have an AGI of 200,000 your AGI is now 200,144 and the 144 gets taxed as ordinary income.

Regards

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  • My question was about not rounding up 0.49 ETH to 0.5 ETH. That's the whole point of the question.
    – platypus
    Dec 31, 2017 at 3:33
  • Adding the 0.01 fee to the cost basis would be 0.01*400= $4. You would subtract the fee from the capital gain so the capital gain becomes 140 instead of 144.
    – moneytender
    Dec 31, 2017 at 4:45

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