EUR in US (USD) Tax Report

I have to report my crypto taxes both in Germany and in the US. The German tax report works well, as I use EUR for deposits / buys. When I try to generate a tax report for the US (in USD), things get weird.

Please consider the following real example. I use the single depot tax method.

  1. May 13: Deposit 931.8 EUR to an Exchange A
  2. May 13: Buy 0.1 BTC using those EUR with a 1% fee of 0.001 BTC. So … 931.8 EUR end up being 0.1 BTC on the exchange and 0.001 BTC fee (9.22 EUR) which of course are gone.
  3. Oct 10: On Exchange B, Sell 0.0108 BTC and get 103.09 EUR and 0.268 EUR fee.

My German tax report now includes the following relevant entries (translated)
Tax Relevant Disposals
In BTC table:
Type: “Trade”, Origin: “Purchased on Exchange A”, Buy date: “May 13”, Cost Basis: “100.69 EUR”, Sell date: “Oct 10”, Amount: 0.0108 (meaning BTC), Proceeds: “103.09 EUR”, Fees: “0.27 EUR”, Outgoing: “Sold on Exchange B”, Short term gains: “2.13 EUR”

My US tax report on the other hand now includes the following relevant entries
Tax Relevant Disposals
In EUR table:
Type “Trade”, Origin: "Add funds on Exchange A”, Buy date: “May 13”, Cost Basis: “$1013.49”, Sell date: “May 13”, Amount “931.8” (meaning EUR), Proceeds: “$1013.49”, Fee: “$9.02” (the 1% fee for the BTC buy) , Outgoing: "Sold on Exchange A”, Short term gains: “-$9.02” (the fees).

In BTC table:
Type: “Trade”, Origin: “Purchased on Exchange A”, Buy date: “May 13”, Cost Basis: “$109.52”, Sell date: “Oct 10”, Amount: 0.0108 (meaning BTC), Proceeds: “$122.55”, Fees: “$0.32”, Outgoing: “Sold on Exchange B”, Short term gains: “$12.71”

The German tax report I mostly understand. I do wonder why the approx. 9 EUR fee are not somehow considered in the cost basis at the respective fraction …?

The US tax report I don’t get. Why do we need the report EUR as if it were a cryptocurrency? Why are the $9.02 fee associated with the fake sell of EUR to USD although they belong to buying BTC. The Short term gain of $12.71 seem to be OK, as they are simply the EUR/USD rate changing …

I would very much appreciate any help.

Hi randomrandom!

In this case the fiat is seen as an investment. You can only select one currency in which you want your tax report to be based on. So in your case if you generate an US report the EUR (or any other fiat) is considered as an investment. Also as the cost basis is now calculated in USD instead of EUR the USD/EUR historical price will generate differences in tax reports.

We highly recommend you to contact one of our tax expert partners or other CPA to organize this correctly.

1 Like

Hi Eetu, thanks a lot for the reply. I had to do some research and indeed the EUR to USD exchange is necessary to include the inherent currency exchange gain. All right.

But could you also explain the $9 fee in the US report and conversely, why it is not included in some fraction in the cost basis of the sell in the German report?

Thanks so much!

hey guys, does this help any? Here is how you are taxed per classification: You searched for classifications - ACCOINTING.com The Hub - Cryptocurrency Portfolio Tracking & Tax Software

Here is some info on LIFO, FIFO, HIFO and Single and Multiple deposit - see solution on this post: FiFo related question - #2 by Matt

Thanks for those interesting Links, Matt!

Hi Eetu,
the thing I still don’t understand is why the BTC purchasing fee is associated with the EUR/USD conversion in the US report. That cannot be the correct or intended behavior, or?
Thanks a bunch!