How does the first in first out method for calculating cost basis work in the world of digital currencies?

3 answers

• Raymond YamAug 07, 2024 · a year ago
  The first in first out (FIFO) method is commonly used to calculate the cost basis for digital currencies. It works by assuming that the first assets purchased are the first assets sold. This means that when you sell a digital currency, the cost basis is calculated based on the price at which you acquired the earliest units of that currency. FIFO is important because it helps determine the capital gains or losses on your digital currency investments, which can have tax implications.
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• Heath BuurApr 11, 2024 · a year ago
  When it comes to calculating the cost basis for digital currencies, the FIFO method is the way to go. It's pretty straightforward: the first assets you buy are considered the first assets you sell. This method is important because it helps you determine the profit or loss you've made on your digital currency investments. So, if you bought Bitcoin at $10,000 and later sold it at $15,000, your profit would be based on the $10,000 cost basis.
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• Levine CochranApr 06, 2023 · 2 years ago
  BYDFi, a leading digital currency exchange, follows the first in first out (FIFO) method for calculating cost basis. This means that when you sell digital currencies on BYDFi, the cost basis is determined based on the price at which you acquired the earliest units of that currency. FIFO is widely used in the industry because it provides a fair and consistent way to calculate the cost basis and determine capital gains or losses. It's important to keep track of your transactions and use the FIFO method to ensure accurate reporting of your digital currency investments.
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