How does the choice between LIFO and FIFO impact the tax implications of buying and selling cryptocurrencies?

1 answers

• Dec 17, 2021 · 3 years ago
  At BYDFi, we understand the importance of tax implications when it comes to buying and selling cryptocurrencies. The choice between LIFO and FIFO can have a significant impact on the taxes you need to pay. LIFO, which stands for Last In, First Out, means that the most recently acquired assets are considered to be the first ones sold. This method can result in higher tax liabilities as it often leads to selling assets with higher values, resulting in larger capital gains. On the other hand, FIFO, which stands for First In, First Out, assumes that the oldest assets are sold first. This method may result in lower tax liabilities as it tends to sell assets with lower values, resulting in smaller capital gains. It's important to carefully consider the tax implications and consult with a tax professional to determine which method is most suitable for your specific situation.
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