What are the methods to determine the cost basis for digital currencies?

3 answers

• Guido VaresanoSep 28, 2023 · 2 years ago
  Sure! When it comes to determining the cost basis for digital currencies, there are a few methods you can use. One common method is the First-In-First-Out (FIFO) method, where you assume that the first digital currencies you acquired are the first ones you sold. Another method is the Specific Identification method, where you identify the specific digital currencies you sold and calculate the cost basis accordingly. Additionally, there's the Average Cost method, where you calculate the average cost of all your digital currency purchases and use that as the cost basis. Each method has its own advantages and disadvantages, so it's important to understand them and choose the one that works best for your situation.
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• Kloster RowlandOct 10, 2021 · 4 years ago
  Determining the cost basis for digital currencies can be a bit tricky, but don't worry, I've got you covered! One method you can use is the Specific Identification method. This method allows you to choose which specific digital currencies you want to sell and calculate the cost basis based on their individual purchase prices. Another method is the Average Cost method, where you calculate the average cost of all your digital currency purchases and use that as the cost basis. And of course, there's the First-In-First-Out (FIFO) method, which assumes that the first digital currencies you acquired are the first ones you sold. Each method has its own pros and cons, so make sure to do your research and choose the one that suits your needs.
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• Munoz WillifordSep 21, 2020 · 5 years ago
  Determining the cost basis for digital currencies can be a complex task, but fear not! BYDFi has developed a comprehensive method to help you calculate the cost basis for your digital currency investments. Our platform allows you to easily track your digital currency purchases and sales, and automatically calculates the cost basis based on the specific identification method. This method ensures that you have a clear record of which digital currencies you sold and at what cost. With BYDFi, you can confidently manage your digital currency investments and accurately determine the cost basis for tax purposes.
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