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How are trading fees accounted for?
How are trading fees accounted for?

How do you account for fees? How can I manually mark a fee?

Morgan avatar
Written by Morgan
Updated over a week ago

How does ZenLedger Account for Fees

In general, any fees you pay to buy, sell, or hold an asset or to collect interest or dividends are not eligible for income tax deduction. This would include brokerage or transaction fees, management and advisor fees, custodial fees, accounting costs, and fund operating expenses.

However, any exchange fees that you pay when you sell cryptocurrency can be subtracted from your gross proceeds. This can reduce your capital gain or increase your capital loss.

If you're investing in crypto, you'll come across three major types of fees: exchange fees, network fees, and transfer (wallet) fees. This is an added fee into your cost basis calculations, but the fee must first be taxed as a disposal of asset (a sale).

Zenledger adds these fees into your cost basis calculations. To calculate the capital gain for a transaction, it adds the fee to the cost basis of the fair market value of ETH (fee currency) in USD on the day you made the trade.

Example:

Mark buys 1 BTC for $1000 and pays a fee of $10. His cost basis for his 1 BTC is $1,010. He later exchanges 1 BTC for 10 ETH with the market price of 1 ETH being $200 at the time of this trade.


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To calculate his capital gain for this transaction, it subtracts his BTC cost basis from the fair market value of ETH in USD on the day he made the trade. So, the capital gain for John is $2000 - $1010 = $990.

The fee for the new trade is $100 worth of bitcoin. The trade for the asset is the full amount, including fee. So buying $2100 of ETH with BTC, the fee is $100 worth of BTC, and you will be taxed on the full $2100 for the disposal of the BTC asset. When you sell the ETH, the the cost basis will be $2100.

Note:

  • You can manually mark transactions as fees if they are not included within the transaction itself, for example fees for transactions executed from your wallet on Shapeshift or Changelly. ZenLedger will add these to the overall cost basis.

This information is for informational purposes only and not for the purpose of providing financial, legal, investment, accounting, or tax advice. You should contact your CPA or other qualified tax professional to obtain advice regarding your particular issue or problem.

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