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Author Topic: FIFO Accounting for Cryptocurrencies  (Read 35 times)
r01k
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February 03, 2018, 08:54:41 PM
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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.
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codewench
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February 04, 2018, 02:11:09 AM
Merited by Foxpup (1), figmentofmyass (1)
 #2

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.
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February 04, 2018, 04:00:13 AM
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I see. Thanks!
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