I’d really like to get some clear guidance on this topic. How should we treat Ethereum gas, or other cryptocurrency fees paid in the native cryptocurrency for that matter.
As I understand it, Ethereum gas is a disposal of property, ETH, to pay for a good or service, the service being the processing of the transaction by the miner. If this is the case, then Ethereum gas fees are disposals subject to capital gain or loss. I do not see Cointracker taking this into account at all, in fact I’m having a hard time finding any tax software or professional who understand this.
Q: Is spending ETH on gas a taxable event?
Yes. When you spend ETH on gas, you are disposing of a “property” to cover a fee. If there is a difference between how much you paid for the ETH (Cost basis) and the FMV at the time you pay for gas fees, there is a capital gain or loss.
This position seems to be reversed in this article: Gas Fees Can Reduce Your Crypto Taxes | CoinTracker
So which is correct? Are cryptocurrency transaction fees disposals are not? Based on my understanding of the spirit and letter of the tax laws of the USA, it really seems to be the case that transaction fees are disposals.
Any clarification would be extremely appreciated. Thanks!