Moving crypto to cold wallet

[lulukern123]

Hi I bought some BTC at the Coinbase and then moved if to the cold wallet. Is any of these events are taxable?

[marctu · Accepted solution]

@lulukern123 thank you for the question.  So, for background a cold wallet is a type of cryptocurrency wallet that securely stores your private crypto keys offline, usually on a physical device. It's also known as a hardware wallet, and it protects your digital crypto assets from online hackers by using a flash drive-like device that isn't connected to the internet.

Moving cryptocurrency between a Coinbase wallet and the cold wallet y is not taxable. You should keep records of your wallet-to-wallet transfers to easily calculate capital gains and losses in the case of a future disposal. Also, you may pay taxes on cryptocurrency disposed of while paying transaction fees for wallet-to-wallet transfers. 

Be well and safe.

All the best,

Marc T.

TurboTax Live Select Time Tax Expert

26 Plus Years of Experience Helping Clients

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[lulukern123]

Are the transactions fees for moving from wallet-to-wallet or from Coinbase to cold wallet and back coudl be added to the cost basis?

[Loretta P]

Hello @lulukern123,

Not every transfer of funds (coins) is considered a sale.  Sending bitcoins from one wallet to another wallet (online or offline) is only a transfer and not considered a sale as the user still has possession of the coins.  The fees associated with the transfer of bitcoins/funds on/off exchange or to and from another wallet would be reported on Schedule A under miscellaneous deductions; however, due to the tax law changes in 2018 they are no longer deductible.  

You need to keep good records of your transfers in case you are ever audited.  

Here are two links that you may find helpful:

Is Transferring Crypto from One Crypto Wallet to Another Crypto Wallet Taxable? 

Can I subtract transfer fees from my capital gains?