What is the best cost basis method for calculating crypto taxes?

3 answers

• Dec 27, 2021 · 3 years ago
  One of the best cost basis methods for calculating crypto taxes is the First-In-First-Out (FIFO) method. This method assumes that the first cryptocurrencies you bought are the first ones you sell. It is a straightforward and widely accepted method that can help you accurately calculate your tax liability. However, it's important to note that the IRS has not provided clear guidelines on cost basis methods for cryptocurrencies, so consulting with a tax professional is recommended to ensure compliance with the latest regulations.
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• Dec 27, 2021 · 3 years ago
  When it comes to calculating crypto taxes, the best cost basis method may vary depending on your specific situation. Some other commonly used methods include Last-In-First-Out (LIFO), Specific Identification, and Average Cost. Each method has its own advantages and disadvantages, so it's important to consider factors such as your trading frequency, the volatility of the cryptocurrencies you hold, and your tax goals. Consulting with a tax professional can help you determine the best cost basis method for your individual needs.
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• Dec 27, 2021 · 3 years ago
  At BYDFi, we recommend using the Specific Identification method for calculating crypto taxes. This method allows you to choose which specific cryptocurrencies you want to sell, which can be beneficial if you want to minimize your tax liability. 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 ensure you are using the most appropriate cost basis method for your crypto tax calculations.
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