What are the differences between the LIFO and FIFO methods in cryptocurrency trading?

1 answers

• Dec 20, 2021 · 3 years ago
  As an expert in cryptocurrency trading, I can tell you that the LIFO and FIFO methods are two common ways to calculate gains and losses in cryptocurrency trading. LIFO stands for Last In, First Out, which means that the most recently acquired coins are considered to be sold first. On the other hand, FIFO stands for First In, First Out, which means that the oldest coins are considered to be sold first. The choice between LIFO and FIFO can have different implications for tax purposes. For example, if you've acquired coins at different prices over time and the price has increased, using LIFO can result in higher capital gains and a larger tax liability. Conversely, using FIFO can result in lower capital gains and a smaller tax liability. It's important to understand the implications of each method and consult with a tax professional to determine the best approach for your specific situation.
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