What are the advantages and disadvantages of using the FIFO cost basis for tracking cryptocurrency transactions?

1 answers

• Feb 17, 2022 · 3 years ago
  As a representative of BYDFi, I can say that using the FIFO cost basis for tracking cryptocurrency transactions has its benefits and drawbacks. The advantage of FIFO is that it is a widely accepted method for determining the cost of assets sold, which can help ensure accurate reporting and compliance with tax regulations. However, one disadvantage of FIFO is that it may not accurately reflect the order in which you acquired or sold your cryptocurrencies. This can impact your overall profitability and tax liability. It's important to carefully consider your specific situation and consult with a tax professional to determine the most suitable cost basis method for your needs. Remember, tax regulations and best practices can vary by jurisdiction, so it's always a good idea to seek professional advice.
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