This article explains how to properly enter bridge transactions for Cross Chain, Wrap, and Staking transactions.
When using a bridge where a coin originates from another chain and the coin's ticker is different (e.g., wrapping ETH on the ETH blockchain to WETH on the MATIC blockchain), the operation has to be entered in three steps.
Important: When entering bridge transactions in CoinTracking, you have two transaction types available: "Swap" or "Trade".
To avoid capital gains or losses, as well as a restart of holding periods when wrapping, we recommend using the "Swap" transaction type. This will classify the operation as tax-free.
However, if it's a taxable transaction, the "Trade" transaction type should be used. By using the "Trade" transaction type, the holding periods will be restarted.
The decision on whether to use the Trade or Swap transaction type should be made in consultation with a tax advisor.
These three steps are divided into:
1) Entering a Swap of the original currency for the bridged currency in the original network (ETH to WETH)
2) Alternatively: Entering a Trade of the original currency for the bridged currency in the original network (ETH to WETH)
3) Withdrawing bridged currency in the original network
4) Depositing bridged currency in the bridged network
1) Entering a Swap of the original currency for the bridged currency in the original network (ETH to WETH)
2) Alternatively: Entering a Trade of the original currency for the bridged currency in the original network (ETH to WETH)
3) Withdrawing bridged currency in the original network
Enter the withdrawal of WETH from the ETH wallet.
4) Depositing bridged currency in the bridged network
Enter the deposit of WETH into the MATIC wallet.
