How does Robinhood calculate the cost basis for digital assets?

3 answers

• Dec 27, 2021 · 3 years ago
  Robinhood calculates the cost basis for digital assets by using the average cost method. This means that they take the total cost of all the assets you own and divide it by the total number of assets. This gives you the average cost per asset. When you sell a portion of your assets, Robinhood will use this average cost to determine the cost basis for the assets you sold. This method helps to simplify the calculation and ensure fairness in determining the cost basis.
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• Dec 27, 2021 · 3 years ago
  When it comes to calculating the cost basis for digital assets, Robinhood uses the FIFO (First-In, First-Out) method. This means that the cost basis for the assets you sell is based on the price at which you acquired the earliest assets of that particular type. By following this method, Robinhood ensures that the cost basis is calculated in a consistent and transparent manner.
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• Dec 27, 2021 · 3 years ago
  At BYDFi, we have a different approach to calculating the cost basis for digital assets. We use the specific identification method, which allows users to choose which specific assets they want to sell. This gives users more control over their cost basis calculation and allows for more strategic tax planning. However, it's important to note that each method has its own advantages and disadvantages, and it's up to the individual to decide which method works best for their investment strategy.
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