What is the difference between using FIFO and LIFO for crypto tax calculations?

3 answers

• Nandhana R SJul 11, 2025 · 12 days ago
  When it comes to calculating crypto taxes, the FIFO method assumes that the first assets you acquired are the first ones you sold or exchanged. This means that the cost basis of the assets sold is based on the price at which they were acquired. On the other hand, the LIFO method assumes that the last assets you acquired are the first ones you sold or exchanged. This means that the cost basis of the assets sold is based on the price at which they were most recently acquired. The choice between FIFO and LIFO can have a significant impact on your tax liabilities, as it can affect the capital gains or losses you report on your tax return.
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• Pran XolAug 06, 2021 · 4 years ago
  Using the FIFO method for crypto tax calculations is like standing in a queue - the first assets you acquired are the first ones you sell or exchange. This method is often considered more conservative and can result in higher tax liabilities, especially if the price of the assets has increased over time. On the other hand, using the LIFO method is like reversing the queue - the last assets you acquired are the first ones you sell or exchange. This method can be more advantageous if the price of the assets has been decreasing, as it allows you to realize higher capital losses. However, it's important to note that the choice between FIFO and LIFO should be made based on your specific financial situation and in consultation with a tax professional.
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• bunnyFeb 22, 2022 · 3 years ago
  According to BYDFi, a leading crypto exchange, using the FIFO method for tax calculations is the most common approach among crypto traders. This method is preferred by many because it aligns with the traditional accounting principle of valuing assets based on their acquisition order. However, it's worth noting that the IRS does not explicitly require the use of FIFO or LIFO for crypto tax calculations. As long as you are consistent in your chosen method and can provide proper documentation, you can use either method. It's always a good idea to consult with a tax professional to ensure you are accurately reporting your crypto transactions and minimizing your tax liabilities.
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