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Lifo vs Fifo

I was about to ask the question when I stumbled upon this [article](https://www.forbes.com/sites/shehanchandrasekera/2020/09/17/what-crypto-taxpayers-need-to-know-about-fifo-lifo-hifo-specific-id/?sh=754e46f936aa). The lesson: keep records, literally down to the minute. Don’t trust exchanges to maintain reporting with detail required tax optimization. Any other advice? Thanks.



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2 Comments

  1. not sure how i would avoid trusting exchanges for my trading data. of course i’ll reconcile the bitcoin and dollar balances, but that certainly doesn’t mean i’ll have to log all of the minutia. your exchange, assuming it’s not some fly-by-night piece of shit, is going to have all the data you need for tax time. typically, a spreadsheet, or csv with columns including date, time, minute and second of each trade.

    and if you’re using one of the top US exchanges, you can bet they’ll be rather helpful to the irs to keep away their scrutiny and ire.

    do you have a question about lifo and fifo? you should realize they aren’t the only 2 cost basis methods you can use. you can literally sequester each satoshi, assign it a specific cost basis, and choose which one you want to be counted when or if you sell any. so you can choose to take your losses first, or you gains first, or last in, or first in, or arbitrary selection which of course requires tedious documentation and logging.

What do you think?

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