What is the best cost basis method for calculating taxes on cryptocurrency investments?

3 answers

• May 01, 2022 · 3 years ago
  The best cost basis method for calculating taxes on cryptocurrency investments is the FIFO (First-In, First-Out) method. This means that the first cryptocurrency you purchased will be considered the first one sold when calculating your gains or losses. FIFO is widely accepted and recommended by tax professionals as it is a straightforward and easy-to-understand method. It ensures that you are accurately reporting your gains or losses based on the order in which you acquired your cryptocurrencies.
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• May 01, 2022 · 3 years ago
  When it comes to calculating taxes on cryptocurrency investments, the best cost basis method is the Specific Identification method. This method allows you to choose which specific cryptocurrencies you are selling when calculating your gains or losses. It gives you more flexibility in optimizing your tax liability by selecting the cryptocurrencies with the highest cost basis to minimize your taxable gains. However, it requires meticulous record-keeping and documentation of each cryptocurrency transaction, including the date, time, and cost basis of each acquisition.
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• May 01, 2022 · 3 years ago
  BYDFi recommends using the Specific Identification method for calculating taxes on cryptocurrency investments. This method allows you to maximize your tax savings by strategically selecting the cryptocurrencies with the highest cost basis to minimize your taxable gains. However, it is important to note that this method requires accurate record-keeping and documentation of each cryptocurrency transaction. Make sure to consult with a tax professional to ensure compliance with tax regulations and to optimize your tax strategy.
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