What is the cost basis for calculating gains and losses on cryptocurrency investments?

3 answers

• Dec 16, 2021 · 3 years ago
  Sure! Cost basis refers to the original value of an asset, in this case, cryptocurrency, for tax purposes. It is used to calculate the gains or losses when you sell or dispose of your cryptocurrency. The cost basis includes the purchase price of the cryptocurrency, any fees or commissions paid, and any other costs associated with acquiring the cryptocurrency. When you sell your cryptocurrency, the difference between the selling price and the cost basis is considered either a capital gain or a capital loss. It's important to keep track of your cost basis for accurate tax reporting.
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• Dec 16, 2021 · 3 years ago
  Cost basis is like the foundation of a building when it comes to calculating gains and losses on cryptocurrency investments. It represents the starting point for determining how much profit or loss you have made. In the context of cryptocurrency, the cost basis includes the amount you paid to acquire the cryptocurrency, any transaction fees, and other costs associated with the purchase. When you sell your cryptocurrency, the gains or losses are calculated by subtracting the cost basis from the selling price. So, if your cost basis is $100 and you sell your cryptocurrency for $150, you would have a $50 capital gain. On the other hand, if you sell it for $80, you would have a $20 capital loss.
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• Dec 16, 2021 · 3 years ago
  When it comes to calculating gains and losses on cryptocurrency investments, the cost basis is crucial. It represents the original value of the cryptocurrency and is used to determine the profit or loss when you sell it. The cost basis includes the purchase price of the cryptocurrency, any fees or expenses incurred during the purchase, and any other costs directly related to acquiring the cryptocurrency. It's important to keep accurate records of your cost basis to ensure proper tax reporting. At BYDFi, we provide tools and resources to help you track your cost basis and simplify your cryptocurrency tax reporting process.
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