Tax Implications and Fees in the US

I’ve been looking through the internet and found a bunch of mixed info. So here are my questions: 1. Can I deduct the fees for buying the coin and also the fees when selling it, or just the fees from the purchase? 2. How do I figure out the fees when they charge me by taking a part of the coin instead of USD? Here are a couple of examples: 1. If I buy a coin for $100.00 and the fee to get it is $1.00, my cost basis would be $101.00. Then, when I sell the coin for $200.00 and the fee is $2.00, wouldn't my total capital gains be $97.00? Since the whole transaction cost was $3.00? 2. Some of my transactions show that fees were taken as a percentage of the coin I bought, while others took USD as fees. How should I calculate the capital gain on the part of the coin that was deducted? Do I need to find out how much I paid for the coin back then and then divide that by the amount of coins that were taken out? Any guidance is really appreciated.

both, but technically you're not claiming a deduction, which generally means a separate line item. what you do is: 1. add the fees charged when acquiring your coins to the purchase price. purchase price + acquisition cost = cost basis. 2. subtract the fees charged when selling your coins from the total sale price. sale price - selling costs = amount received from sale. 3. amount received from sale - cost basis = capital gains. https://finance.zacks.com/stock-transaction-fees-taxdeductible-8284.html when you buy coins and they deduct the fee in coins, your cost basis is literally just the total purchase price. example: you buy 1 coin for $38k. they take 0.001 BTC in fees, which is 0.1%. you're cost basis is still $38k (for 0.999 BTC) because that's the original purchase price + fees paid. -$100 + $1 = $101 cost basis, correct. -$200 - $2 = $198 received from sale. -$198 - $101 = $97. that's what i get as well. that capital gain is not yours to report---you did not own it. consider my example above. your position is for 0.999 BTC, not 1 BTC. the 0.001 BTC deducted as a fee belongs to the exchange, so you are not receiving any gains from it. the description of your property on form 8949 would be 0.999 BTC, and the cost basis would be $38k. when you sell at $40k and another 0.1% fee is deducted: -$39960 - $40 = $39920 received from sale -$39920 - $38000 = $1920 capital gains exchange exports can make things seem a lot more complicated than they are. the key is to view each "position" (lot of coins held) as an all-inclusive dollar amount.

What happens if I deposit money into an exchange to trade, make a bunch of trades, and at the end of the tax year I am holding more BTC than dollars on the exchange? Since I went back and forth from BTC to USD multiple times, do I have to calculate capital gains on every trade even though I am holding mostly BTC at end of year?

Thanks for the example. I just want to double check that my spreadsheet is correct. Can you please look at this and tell me what you come up as far as capital gains? I would really appreciate it.          Price        Amount            Total               Fee        Fee Coin Buy: 0.1555   570.6   88.72830000   0.5706   ADA Sell: 0.1591   570           90.68700000       0.0907       USD

yes, technically you need to report capital gain/loss for every time you sold BTC to USD. even if you're holding 100% BTC now, that just means your current gains/losses are unrealized. that doesn't erase all the capital gains you made earlier in the year. cost basis = $88.7283 received from sale = $90.5963 capital gain = $1.87 *i am not a lawyer. this is not legal advice.

So you just do the math (subtraction) on the selling as the buying total is included even with the fee correct? What happens if the sell coin is not USD and is the same like ADA?

Why wasn't the fee from when I bought it 0.5706 deducted from the $88.7283?

because it was deducted from your ADA position. notice the discrepancy between the amount of ADA you bought and the amount you sold. so you really bought 570 ADA for $88.7283---that's your actual cost basis, the price you originally paid. the fee is factored into the price. in general, yes. exchanges charge fees on the currency you convert to, so when you buy ADA, your total price paid already includes the fees paid. the ADA gets deducted from your ADA balance, which doesn't affect the USD amount you paid. your cost basis is the USD amount you paid. like ADA/BTC? the same idea applies---when you convert to ADA, your fees are taken in ADA. when you convert to BTC, your fees are taken in BTC. trading against BTC involves an extra step too. you need to calculate the fair market value (USD value) of your cost basis and sale proceeds, even though those are denominated in BTC. trading against USD or stablecoins is much easier for tax purposes.