Cost-basis accounting

Cost-basis accounting methods allow you to choose which asset you sell, trade, or spend first for purposes of calculating your tax liability. Coinbase now offers a range of methods: 

  • HIFO (Highest In, First Out): A cost-basis method where you first dispose of assets with the highest original purchase price.

  • LIFO (Last In, First Out): A cost-basis method where you first dispose of assets that you acquired most recently. 

  • FIFO (First In, First Out): A cost-basis method where you first dispose of assets that you acquired first. 

To view or change your cost-basis method

  1. Sign in to your Coinbase account

  2. Navigate to Taxes, then Settings to view the cost-basis method currently being applied to your transactions.

    • You can also view your cost-basis method under Summary and Activity in the gains/losses sections.

  3. To change the method, select the cost-basis method dropdown. 

    • If you change the cost-basis method, that changes will apply to all future transactions.

When you change your cost-basis method for the first time, you may also be given the option to confirm your settings from previous tax years. If you filed your crypto taxes previously but didn’t calculate your tax liability using the highest in, first out (HIFO) method, you can update the method applied to your historical transactions on Coinbase for consistency and to avoid paying taxes twice on the same activity.

This can only be done once and for a limited time. If you choose to change the cost-basis method applied to your historical transactions, that change will also be stored as your default setting moving forward. 

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