What is a cost basis?

Put simply, your cost basis is the original price you paid for an asset - in this instance, crypto. Knowing your cost basis is vital to help you accurately calculate your cryptocurrency profits and losses. You subtract your cost basis from the price you sold your asset for to calculate your capital gains or losses.

What is the cost basis of a bitcoin?

If you paid USD 20,000 to acquire one bitcoin on August 1st, the cost basis would be USD 20,000. The cost basis is important because it's essential for calculating the gains and losses. While determining the cost basis for a particular coin is pretty straightforward, calculating gains and losses can quickly become complicated.

What is cost basis in crypto taxes?

One of the most misunderstood concepts in crypto taxes is cost basis or, simply, what you paid to acquire a crypto asset. It's a very important number because you have to know what it is to know how much you owe in taxes. What is cost basis?

What is the highest in first out cost basis method?

The Highest In First Out (HIFO) cost basis method means it doesn’t matter when you purchased an asset, it's all about how much it cost you to buy the asset. The highest price you paid for a given asset is the cost basis you use when you sell it. The benefits of HIFO for investors are clear - the larger the cost basis, the lower the capital gain.