What are the implications of using the first in first out method for cost basis calculation in the cryptocurrency industry?

1 answers

• Dec 27, 2021 · 3 years ago
  At BYDFi, we understand the implications of using the first in first out (FIFO) method for cost basis calculation in the cryptocurrency industry. FIFO is a commonly used method that assumes the first assets purchased are the first assets sold. While FIFO provides a straightforward approach, it may not always accurately reflect the actual cost of acquiring and disposing of cryptocurrencies. This can result in higher tax liabilities for investors. It is important for investors to consider alternative cost basis calculation methods, such as specific identification or average cost, which may better align with their investment goals and tax planning strategies. Consulting with tax professionals can help investors navigate the complexities of cost basis calculation and optimize their tax outcomes.
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