Are there any specific cost basis methods recommended for minimizing tax obligations on cryptocurrency investments?

3 answers

• Jan 12, 2022 · 3 years ago
  One specific cost basis method that can be recommended for minimizing tax obligations on cryptocurrency investments is the FIFO (First-In, First-Out) method. This method assumes that the first cryptocurrency assets purchased are the first ones sold or exchanged. By using this method, you can potentially reduce your tax liability by selling or exchanging the assets with the highest cost basis first. However, it's important to consult with a tax professional to ensure compliance with tax regulations and to determine the best method for your specific situation.
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• Jan 12, 2022 · 3 years ago
  Another cost basis method that can be used to minimize tax obligations on cryptocurrency investments is the specific identification method. This method allows you to choose which specific cryptocurrency assets you want to sell or exchange, based on their individual cost basis. By strategically selecting assets with a lower cost basis, you can potentially reduce your taxable gains. However, it's important to keep detailed records and documentation of your cryptocurrency transactions to accurately determine the cost basis of each asset.
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• Jan 12, 2022 · 3 years ago
  At BYDFi, we recommend using the specific identification method for minimizing tax obligations on cryptocurrency investments. This method provides more flexibility and control over which assets to sell or exchange, allowing you to strategically manage your tax liability. However, it's important to consult with a tax professional to ensure compliance with tax regulations and to determine the best method for your specific situation.
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