Gas fees

How it works

Gas is the fee paid to a network to process a transaction. For tax purposes, fees paid to acquire an asset are added to its basis, and fees paid to sell are subtracted from proceeds. Fees paid in the network’s native token are themselves small disposals of that token at fair market value. Fees for transfers between your own wallets are generally not deductible for investors, though a business can deduct them.

Why it matters

On active accounts, fees are a meaningful basis adjustment that software often ignores, and paying gas in ETH creates hundreds of tiny taxable events.

Related: cost basis.