If you are seeing a small gain or loss on a non-taxable transaction in your CoinLedger account, do not panic. This is most likely due to fees.

Fees are considered a taxable disposal of your crypto. This is why you may see a gain or loss on a transaction when you wouldn't expect to see one, even on a transaction that is labeled as non-taxable.

First, let's consider how crypto is taxed. Crypto is either taxed as capital gains or income. When you dispose of cryptocurrency by selling it or trading it away, you’ll recognize a capital gain or loss depending on how the price of your crypto has changed since you received it. This is also known as a taxable event.

Taxable events include selling your crypto for fiat or trading your crypto for another crypto asset.

In cases where you simply move cryptocurrency between wallets you own, though, capital gains tax is not triggered, and the transaction is considered to be non-taxable. Non-taxable crypto transactions include:

However, these non-taxable transactions may still incur a small gain or loss, and this is due to fees. This is because a fee is still considered a taxable disposal of your crypto.

In other words, when you pay a fee on a non-taxable transaction, you are still disposing of crypto, which the IRS considers a taxable event. As a result, you may recognize a gain or loss depending on how the value of your crypto has changed since you received it.

Let's consider the following example:

In this transaction, I bought BTC with USD on Kraken. According to the IRS, the act of buying crypto with fiat is non-taxable. However, notice that in this transaction I paid a small fee in BTC:

Because I disposed of my BTC to pay this fee, I triggered a small taxable disposal of my crypto. That is why this transaction is showing a small loss of 2 cents.

Therefore, seeing a small gain or loss on a non-taxable transaction is expected behavior, and is not a reason to panic. To learn more about how fees are taxed, we recommend reading the following guides: