Coinbase card transactions considered expenses?

Forum|Forum|3 years ago
March 13, 2023
1 reply
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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!

Best answer by JohnB5677

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.

JamesG1

Level 15

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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fintiutAuthor

Level 2

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.

JohnB5677Answer

Level 15

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.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"