Cost Basis Tracking explained

When calculating your crypto taxes, there exist different approaches for tracking cost basis across your holdings. Coinpanda offers two main options under Cost Basis Tracking, each with a distinct approach.

Using the Universal method, all your holdings of a given cryptocurrency are treated as one combined cost pool - regardless of where or how they were acquired.

For example, if you bought 10 SOL on Coinbase for $1,000 and another 10 SOL on Binance for $500, then later sell 10 SOL from Binance:

With Universal tracking and FIFO as the selected cost basis method, the cost basis would be $1,000 because the First-In, First-Out (FIFO) rule is applied across your entire portfolio, not just within one wallet or account.

In other words, it does not matter where you bought the coins since all units of the same coin are treated as a single lot.

Contrary to the Universal method, each wallet or exchange account is treated as its own separate cost pool when using the Wallet-based method.

Using the earlier example: With Wallet-Based tracking, the cost basis is $500, because it only applies within the Binance pool and does not consider SOL bought on other platforms.

FIFO/LIFO is based on the original purchase date of the asset, not the date it arrives in a new wallet.

Example:

With wallet-based cost tracking, FIFO would treat the 2023 ETH from Coinbase as the first to be disposed of, because even though it entered Gemini later, its original acquisition date (2023) makes it the oldest lot in that wallet.