How to file capital gains/losses for crypto-to-crypto transfers?

[jjong]

I've been trying to figure out how to file the form 8949 for my BTC -> DOGE trades in 2021 and it's making my head spin.

Long and short of it is I did 2 BTC transfers in 2021 to buy some DOGE. I'm struggling to figure out the proceed/sales price, cost basis, and the actual BTC amount (whether or not to include the amount before/after fees)

Chronological history

1. 1/28/21: Bought 0.00153 BTC via Changelly. Cost basis was $53.63.

2. 1/29/21: Sent the above 0.00153 BTC to Coinomi.

3. 2/2/21: Sent 0.00156925 BTC from Coinbase (already had enough BTC in Coinbase from multiple previous purchases) over to Changelly. Fees were 0.00003992 BTC, so 0.00152933 BTC actually got sent.

4. 2/2/21: Sent over the above 0.00152933 BTC from Changelly to Coinomi. At this point I now have 0.00305933 BTC in Coinomi.

5. 2/2/21: Exchanged BTC in Coinomi wallet (.00305933 BTC) for DOGE. Transaction fee of .000171 BTC, so 0.00288833 BTC (.00305933 BTC - .000171 BTC) was actually sent for 3068.179917 DOGE.

Questions I have:

1. For the Form 8949, do I have to have 2 separate rows for each time I sent the BTC over to Coinomi (1/29/21, 2/2/21)? Or, is it just one row for the total amount of BTC (0.00288833 BTC) I traded for DOGE on 2/2/21? If just one row for the total amount, do I use the actual amount of BTC traded minus fees (0.00288833 BTC) or is it the amount before fees (.00305933 BTC)?

2. For the Form 8949's date acquired field, do I input this based on the the cost basis method I want to use (FIFO, LIFO, average cost basis etc.)?

3. For the Form 8949's proceeds/sales price, I'm using the BTC amount * closing price. Do I use a different price or is closing price for the day of the "sale" good enough?

Thanks everyone for the help!

[JohnB5677 · Accepted solution]

The first point to make is, moving your crypto between wallets or exchanges that you own is not taxable. As long as the virtual currency remains in your possession, this is simply a transfer and not a transaction.

• The only transaction that is taxable is what you called "the exchange" of BTC for DOGE.
• You correctly stated the BTC cost basis as Bought 0.00153 BTC via Changelly. Cost basis was $53.63.
• Crypto transfer fees are not deductible..  So you can not reduce cost basis based on them.
• The selling price of BTC will be the purchase price of DOGE (provided it was a 100% transaction.

1. For the Form 8949, do I have to have 2 separate rows for each time I sent the BTC over to Coinomi (1/29/21, 2/2/21)? Or, is it just one row for the total amount of BTC (0.00288833 BTC) I traded for DOGE on 2/2/21?

   1. It will only be one row for the BTC - DOGE transaction

2. If just one row for the total amount, do I use the actual amount of BTC traded minus fees (0.00288833 BTC) or is it the amount before fees (.00305933 BTC)?

   1. It is the amount before the fees.

3. For the Form 8949's date acquired field, do I input this based on the the cost basis method I want to use (FIFO, LIFO, average cost basis etc.)?

   1. You would normally use FIFO, and the BTC purchase date is 01/21/2021.

4. For the Form 8949's proceeds/sales price, I'm using the BTC amount * closing price. Do I use a different price or is closing price for the day of the "sale" good enough?

   1. It is best to use the value at the moment the transaction took place.

[jjong]

Thank you so much! This answered all my questions