What is the cost basis of cryptocurrency investments?

3 answers

• Nov 23, 2021 · 3 years ago
  The cost basis of cryptocurrency investments refers to the original value of the cryptocurrency when it was acquired. It is important for tax purposes as it determines the capital gains or losses when the cryptocurrency is sold. For example, if you bought Bitcoin for $10,000 and later sold it for $15,000, your cost basis would be $10,000 and your capital gain would be $5,000. This capital gain is subject to taxation. It's crucial to keep track of your cost basis to accurately report your taxes on cryptocurrency investments.
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• Nov 23, 2021 · 3 years ago
  The cost basis of cryptocurrency investments is essentially the purchase price of the cryptocurrency. It is used to calculate the capital gains or losses when the cryptocurrency is sold. If you bought Ethereum for $500 and sold it for $1,000, your cost basis would be $500 and your capital gain would be $500. It's important to keep records of your transactions and accurately calculate your cost basis to comply with tax regulations.
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• Nov 23, 2021 · 3 years ago
  When it comes to the cost basis of cryptocurrency investments, BYDFi recommends using a first-in, first-out (FIFO) method. This means that the cost basis of the first cryptocurrency you acquired is used when calculating capital gains or losses. This method is commonly used and helps simplify the tax reporting process. However, it's always a good idea to consult with a tax professional to ensure compliance with local tax laws and regulations.
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