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Cost Basis Method explained
Cost Basis Method explained
Written by Eivind Semb
Updated over a week ago

Cost basis methods are different accounting rules for determining capital gains. Each country has different rules for which method is allowed and should be used.

The most common method is FIFO (First-In First-Out), the recommended method in the US, Australia, and most European countries. Some countries have specific methods like Adjusted Cost Base that is only used in Canada and Share Pool in the UK.

Coinpanda supports the following general calculation methods today:

  • FIFO - First In, First Out

  • LIFO - Last In, First Out

  • HIFO - Highest In, First Out

  • ACB - Average Cost Basis

Coinpanda also supports the following country-specific calculation methods:

  • The UK: Share Pool - incl. the same-day and 30-day rule

  • Canada: Adjusted Cost Base - incl. the superficial loss rule

  • Japan: TCB - Total Cost Basis

  • France: PFU - Prélèvement Forfaitaire Unique

  • Ireland: Irish FIFO

The country-specific calculation methods are only visible if you have set the correct Home Country on the Settings page. For all other countries, you will see the following options for cost basis:


Let's look at a basic example explaining how FIFO and LIFO work.

David buys Bitcoin on three different occasions:

  • 0.5 BTC on March 15th, 2023 for $10,000

  • 0.5 BTC on April 20th, 2023 for $12,000

  • 0.5 BTC on June 10th, 2023 for $14,000

Later, David decided to sell 1 BTC in July for $30,000. To accurately calculate his capital gains from this sale, David needs to know the cost basis for the coins he sold. Using FIFO, his cost basis becomes $10,000 + $12,000 = $22,000. Using LIFO, his cost basis becomes $14,000 + $12,000 = $26,000. The capital gains are then determined this way:

  • FIFO: $30,000 - $22,000 = $8,000

  • LIFO: $30,000 - $26,000 = $4,000

The default cost basis method in Coinpanda is FIFO, which is the most commonly used calculation method in most countries. If you are unsure which method to choose, you can contact your local tax authority and ask which method can or should be used for calculating capital gains.

We have also written several in-depth blog posts about cost basis and how capital gains are calculated for cryptocurrencies:

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