What is the difference between FIFO and LIFO accounting methods in the context of cryptocurrency trading?

1 answers

• Dec 05, 2021 · 3 years ago
  In the context of cryptocurrency trading, the FIFO and LIFO accounting methods can have different effects on the calculation of gains or losses. FIFO assumes that the first assets purchased are the first ones sold, while LIFO assumes that the most recently acquired assets are the first ones sold. The choice between FIFO and LIFO can impact the cost basis used for calculating gains or losses, which in turn affects the amount of taxes owed. It's important for cryptocurrency traders to understand the implications of these accounting methods and choose the one that aligns with their trading strategies and tax obligations. Please note that this information is for educational purposes only and should not be considered as financial or tax advice. It's always recommended to consult with a qualified professional for personalized guidance.
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