How Does the "First-In, First-out" (FIFO) Method Apply to Crypto Taxation? ⎊ Path

How Does the “First-In, First-Out” (FIFO) Method Apply to Crypto Taxation?

FIFO is a cost basis accounting method that assumes the first cryptocurrency purchased is the first one sold. This is the default method if a trader does not specify a different one.

It can lead to higher capital gains if the oldest acquired crypto has appreciated significantly, but it is often the easiest to track.

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How Does the Holding Period Calculation Work under the FIFO Method?

When Might a Trader Prefer the Specific Identification Method over FIFO?

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Glossar

Cost Basis

Calculation ⎊ Cost basis represents the total original value of an asset for tax purposes, encompassing the purchase price plus any associated transaction fees or commissions.

Cost Basis Accounting

Valuation ⎊ Cost basis accounting, within cryptocurrency, options, and derivatives, establishes the original acquisition cost of an asset for tax reporting and performance measurement, fundamentally impacting realized gain or loss calculations.

How Does the “First-In, First-out” (FIFO) Method Apply to Crypto Taxation?