Per IRS rules, you must choose your cost basis method before the trade settles; once a transaction executes, it cannot be changed. You can select your account level cost-basis accounting method in your Coinbase tax settings or during the trade process. This determines how your gains/losses are calculated for tax purposes and lets you choose which asset to sell, trade, or spend first.
Methods offered by Coinbase
Method | Definition |
|---|---|
HIFO (Highest In, First Out) | First dispose of assets with the highest original purchase price |
LIFO (Last In, First Out) | First dispose of assets that you acquired most recently |
FIFO (First In, First Out) | First dispose of assets that you acquired first |
View or select your cost-basis method
There are two ways to modify your account level cost-basis methods:
Method 1: When you first visit your tax settings, confirm your cost-basis method. Select the method you used in previous tax years to avoid paying taxes twice on the same capital gains. Note that the newly elected cost basis methods can only be applied to open and future trades and will not be applied to your historical completed trades.
Go to the Tax settings page.
Select the Cost-basis method dropdown to see your current method.
Confirm the method you used for previous years, if applicable.
Select Keep HIFO method for all years if you've previously filed and paid taxes using this method and choose Confirm.
Select I want to update if you used a different method to file and pay taxes previously. Select and save your preferred method.
Select the method to apply to future transactions.
Select Save.
Method 2: You can also choose your cost basis method in the trade process.
On the order preview screen, select the cost basis method.
Change your settings in the Cost basis method screen.
This setting is applied to all open and future trades unless otherwise changed.
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