How does the IRS determine the cost basis for cryptocurrency transactions on Form 8949?

3 answers

• Dec 18, 2021 · 3 years ago
  When it comes to determining the cost basis for cryptocurrency transactions on Form 8949, the IRS follows specific guidelines. The cost basis is the original value of the asset, which is used to calculate capital gains or losses. For cryptocurrency, the cost basis is typically the amount you paid to acquire the coins, including any fees or commissions. It's important to keep accurate records of your transactions and the associated costs to ensure accurate reporting to the IRS.
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• Dec 18, 2021 · 3 years ago
  The IRS uses the concept of FIFO (First-In-First-Out) to determine the cost basis for cryptocurrency transactions. This means that the coins you acquired first are considered to be the ones you sold first. For example, if you bought 1 BTC at $10,000 and later bought another 1 BTC at $15,000, and then sold 1 BTC, the cost basis for the sold BTC would be $10,000. It's crucial to keep track of your transaction history and the order in which you acquired your coins to accurately calculate the cost basis.
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• Dec 18, 2021 · 3 years ago
  As an expert in the field, I can tell you that BYDFi, a leading cryptocurrency exchange, provides a comprehensive transaction history report that can help you determine the cost basis for your cryptocurrency transactions on Form 8949. This report includes details such as the date, time, and price of each transaction, as well as any fees or commissions incurred. By using BYDFi's transaction history report, you can ensure accurate reporting to the IRS and simplify the process of calculating your cost basis.
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