How a cost basis is counted
When you sell cryptocurrency, your taxable gain or loss is the difference between the sale price and your cost basis. The cost basis is what you paid when you originally acquired that crypto. The method you choose determines which purchase is matched to each sale.
FIFO
First In, First Out
FIFO matches each sale to the oldest purchase you have not yet sold. If you bought Bitcoin three times and then sold once, FIFO assumes you sold from the first purchase.
This method is straightforward and widely used. If your earliest purchases have the lowest cost, FIFO will show higher gains.
LIFO
Last In, First Out
LIFO matches each sale to the most recent purchase. If you bought Bitcoin three times and then sold once, LIFO assumes you sold from the third purchase.
This method can reduce short-term gains if recent purchases were at higher prices. Not all jurisdictions accept LIFO for tax reporting.
Fees
Trading fees reduce your taxable gain. When you sell, the fee is subtracted from your proceeds. When you buy, the fee can be added to your cost basis. Keep fee records in your CSV exports.
Staking and airdrops
Staking rewards and airdrop tokens are generally treated as income at the time you receive them. The market value on the day you received them becomes your cost basis for those tokens. When you later sell them, you calculate gain or loss from that basis.
Transfers between your own wallets
Moving crypto from one address you control to another address you control is not a sale. These transfers do not create a taxable event. Your cost basis stays the same when you move tokens between your own wallets.