What is the best cost basis method for tracking cryptocurrency transactions?

3 answers

• Nov 26, 2021 · 3 years ago
  One of the best cost basis methods for tracking cryptocurrency transactions is the FIFO (First-In, First-Out) method. This method assumes that the first cryptocurrency asset you acquired is the first one you sell or trade. FIFO is widely used and is considered a standard method for tax reporting purposes. It helps ensure accurate tracking of gains and losses. However, it's always recommended to consult with a tax professional to determine the best method for your specific situation.
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• Nov 26, 2021 · 3 years ago
  When it comes to tracking cryptocurrency transactions, the best cost basis method may vary depending on your individual needs and preferences. Some other commonly used methods include LIFO (Last-In, First-Out), specific identification, and average cost. Each method has its own advantages and disadvantages, so it's important to carefully consider your options and choose the one that aligns with your goals and requirements. Remember to keep detailed records of your transactions to support your chosen cost basis method.
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• Nov 26, 2021 · 3 years ago
  At BYDFi, we recommend using the specific identification method for tracking cryptocurrency transactions. This method allows you to select which specific cryptocurrency assets you want to use for each transaction, providing more flexibility and control over your cost basis. It's important to keep accurate records and documentation to support your chosen method. However, it's always a good idea to consult with a tax professional to ensure compliance with tax regulations and reporting requirements.
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