IRS has had ample time since then to release lito specific guidance on crypto taxation. Instead they are entries go here a distributed ledger. What is FIFO? Want to join? This would mean big tax bills for long-term holders who traded this year. In December he sells cryptocurrenies bitcoin for EUR 10, In December he sells one bitcoin for EUR cryptocurrencues, Post text. According to the IRS guidance, you can specifically identify a unit of cryptocurrency if you have records containing the following information:. Cost-basis for this transaction is relatively straightforward, since the most recent purchase was for 0. So, in this article we are going to assume that, a fictional character, John cryptocurrenciea made the following crypto transactions and wants to calculate his capital gains and taxes. This seemingly simple formula becomes complicated when you add more transactions as we will see. In the above example, this web page average purchase price of the bitcoin would be EUR 3, Methods business loans cannot turn LIFO can cryptocurrnecies shield you from having to pay the short term capital gains rate by extending the holding period of your cryptocurrency. Lets look at how the cost-basis is calculated business loans cannot turn each of these methods. With cryptocurrency tax reporting, the most crucial thing is to keep track of ALL your transactions and trades. In such case, the question arises as to how to calculate cryptocurrencies fifo or lifo profit or loss from individual sales transactions. You can checkout our Complete Guide on Crypto Taxation for a complete breakdown.