Coinbase card transactions considered expenses?

[fintiut]

It seems the import tool has labeled everytime I used my coinbase card as "Capital Gain/Loss". Is this right? The other option is withdrawal. I hope it is right because otherwise I have to somehow edit every single time I purchased something with it. I bought USDC to fund the card. I did not sell any other crypto to make the purchases.

I tried googling expense vs withdrawal but they didn't seem to apply to what amounted to using a prepaid debit card.

Thanks!

[JamesG1]

That sounds correct.  Your debit card sold a small portion of cryptocurrency each time that you made a purchase.  

That small portion of cryptocurrency is considered a sale of a capital asset and subject to capital gain or loss.

For example, you bought crypto A for $100 and crypto A appreciated to $150.  If you used crypto A to make a $150 personal purchase with the debit card, you will report a $50 gain on disposal of the unit of crypto A.

@fintiut   

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[fintiut]

Hmm but I bought and sold my usdc for $1. It's a stable coin. There was no appreciation or loss in value. This was used to purchase goods and services. This gets called a capital loss? So all my expenditures become capital losses? This doesn't seem right.

[JohnB5677 · Accepted solution]

Yes, based on the current posting practice they would be listed as losses, but you really didn't lose any money.

I understand your point, but this is a reportable transaction, and it is recorded as Capital gain/loss.

• In the US we don't deal in cryptocurrency (yet).  We deal in dollars.
• When you spent your Coins, you utilized a dollar value to make the purchase.  
• The dollar value that was spent has to be compared to the value when you "got" the coin.
• In your example above the change was zero (0).
• However, the transaction still has to be reported.
• A zero value is posted as a capital loss.  This is only an accepted practice.
• There is no change in tax if you called it a capital gain, but that is the format that is used for a zero gain.