What are the different cost basis methods that can be used for reporting cryptocurrency gains and losses?

3 answers

• Nov 23, 2021 · 3 years ago
  One common cost basis method for reporting cryptocurrency gains and losses is the First-In-First-Out (FIFO) method. This method assumes that the first cryptocurrency assets purchased are the first ones sold. Another method is the Last-In-First-Out (LIFO) method, which assumes that the most recently acquired assets are the first ones sold. Additionally, the Specific Identification method allows individuals to select which specific assets are being sold, which can be useful for tax planning purposes. It's important to consult with a tax professional to determine the most appropriate cost basis method for your specific situation.
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• Nov 23, 2021 · 3 years ago
  When it comes to reporting gains and losses from cryptocurrency transactions, there are several cost basis methods to choose from. One popular method is the Average Cost method, which calculates the average cost of all the assets in your portfolio. Another method is the Highest-In-First-Out (HIFO) method, which assumes that the highest cost assets are the first ones sold. Some individuals also use the Low-Cost-Basis method, which assumes that the lowest cost assets are the first ones sold. Each method has its own advantages and disadvantages, so it's important to carefully consider your options and consult with a tax advisor if needed.
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• Nov 23, 2021 · 3 years ago
  BYDFi, a leading cryptocurrency exchange, recommends using the Specific Identification method for reporting gains and losses from cryptocurrency transactions. This method allows individuals to select which specific assets are being sold, providing more flexibility and potential tax savings. However, it requires meticulous record-keeping and may not be suitable for everyone. It's always a good idea to consult with a tax professional to determine the best cost basis method for your individual circumstances.
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