What is the best cost basis calculation method for crypto investments?
Battle DamborgDec 25, 2021 · 3 years ago3 answers
I am new to crypto investments and I want to know the best method to calculate the cost basis for my investments. Can you provide me with some insights on the most effective cost basis calculation method for crypto investments?
3 answers
- Dec 25, 2021 · 3 years agoThe best cost basis calculation method for crypto investments is the FIFO (First-In-First-Out) method. This method assumes that the first cryptocurrency you bought is the first one you sell. It is widely used and accepted as it is a straightforward and simple method to calculate the cost basis. FIFO ensures that you are accurately accounting for the gains or losses on your investments based on the order in which you acquired them.
- Dec 25, 2021 · 3 years agoWhen it comes to calculating the cost basis for crypto investments, the FIFO method is the most commonly recommended approach. It helps you maintain a clear record of your transactions and ensures that you accurately report your gains or losses. By following the FIFO method, you can easily determine the cost of the cryptocurrencies you sell based on the order in which you purchased them. This method is widely accepted and recognized by tax authorities as well.
- Dec 25, 2021 · 3 years agoThe best cost basis calculation method for crypto investments is the specific identification method. This method allows you to choose which specific cryptocurrencies you want to sell, based on their cost basis. It gives you more flexibility in managing your investments and can be particularly useful if you want to strategically sell certain cryptocurrencies to optimize your gains or minimize your losses. However, it requires meticulous record-keeping and may not be suitable for everyone.
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