What is the best method to determine the cost basis of my digital assets?

3 answers

• Dec 28, 2021 · 3 years ago
  One of the best methods to determine the cost basis of your digital assets is by using the FIFO (First-In, First-Out) method. This method assumes that the first assets you acquired are the first ones you sold or transferred. By keeping track of the date and price at which you acquired each asset, you can calculate the cost basis accurately. FIFO is widely used and accepted by tax authorities for determining the cost basis of digital assets.
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• Dec 28, 2021 · 3 years ago
  Calculating the cost basis of your digital assets can be a complex task, but it's essential for accurate tax reporting. One popular method is the specific identification method, where you identify and track the cost of each individual asset. This method allows you to choose which assets to sell or transfer, giving you more control over your tax liabilities. However, it requires meticulous record-keeping and may not be suitable for everyone.
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• Dec 28, 2021 · 3 years ago
  At BYDFi, we recommend using a reputable cryptocurrency tax software to determine the cost basis of your digital assets. These software solutions integrate with popular exchanges and wallets, automatically importing your transaction history and calculating the cost basis for you. They also generate tax reports that are compliant with tax regulations. Using a dedicated tax software can save you time and ensure accurate calculations, especially if you have a large number of transactions or complex trading strategies.
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