FIFO Accounting for Cryptocurrencies

[r01k]

In absence of clearer guidance from the IRS the safest method to account for cryptocurrency gains or losses is FIFO. Let's say that in 2012 I bought 1 XCoin at $1. In 2017 I get 10 more at $11 this time. But January FUD makes me sell 10 at $12.

If I have understood right, when FIFO accounting is applied the percentual gain for the 10 coins sold is considered equal to the very first I bought: 10 coins x $10 gain each = $100. That means that I'll pay taxes on a technical gain significantly higher than what I actually made.

[codewench]

Let's say that in 2012 I bought 1 XCoin at $1. In 2017 I get 10 more at $11 this time. But January FUD makes me sell 10 at $12.

If I have understood right, when FIFO accounting is applied the percentual gain for the 10 coins sold is considered equal to the very first I bought: 10 coins x $10 gain each = $100.

No. You've sold one coin with a gain of $11, and nine coins with a gain of $1. You are left with one coin with a cost basis of $11. Your gain is $20 - split into $11 long term and $9 (likely) short term gain.

[r01k]

I see. Thanks!