How do FIFO and LIFO accounting methods affect the profitability of cryptocurrency investments?

1 answers

• Dec 29, 2021 · 3 years ago
  As an expert in the cryptocurrency industry, I can tell you that the FIFO and LIFO accounting methods have a direct impact on the profitability of cryptocurrency investments. FIFO tends to be the more commonly used method as it aligns with traditional accounting practices. By assuming that the first assets purchased are the first ones sold, FIFO can result in a lower cost basis for assets sold, leading to potentially lower taxable gains. On the other hand, LIFO assumes that the most recently acquired assets are the first ones sold, which can result in higher taxable gains. It's important for investors to carefully consider the tax implications and consult with a tax professional or financial advisor to determine the most suitable accounting method for their cryptocurrency investments.
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