What are the potential risks and challenges of transitioning from LIFO to FIFO in the digital currency market?

1 answers

• May 08, 2022 · 3 years ago
  Transitioning from LIFO to FIFO in the digital currency market can have significant implications. One potential risk is the impact on tax liabilities. FIFO accounting method assumes that the first assets purchased are the first ones sold, which may result in higher capital gains taxes. Additionally, accurate record-keeping becomes crucial when using FIFO. Traders and investors need to keep track of the order in which assets are acquired and disposed of, which can be time-consuming and prone to errors. It is important to consult with a tax professional and carefully evaluate the potential risks and challenges before transitioning from LIFO to FIFO in the digital currency market.
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