Crypto Cost Basis 101: What You Need to Know to File Taxes
Director of Tax Strategy
Miles Brooks holds his Master's of Tax, is a Certified Public Accountant, and is the Director of Tax Strategy at CoinLedger.
Head of Tax Strategy
Jordan Bass is the Head of Tax Strategy at CoinLedger, a certified public accountant, and a tax attorney specializing in digital assets.
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Cost basis is how much you paid to acquire your cryptocurrency.
You can find your cost basis by adding the fair market value of your crypto at the time of receipt, plus any fees directly related to the acquisition.
If you acquired your crypto at multiple price points, you can use an accounting method like HIFO, LIFO, or FIFO to calculate your cost basis.
Frequently asked questions
Are fees included in your cost basis?
Expenses related to acquiring your crypto — such as transaction fees and gas fees — can be added to your cost basis.
Which method should you choose to calculate crypto cost basis?
While the IRS currently allows investors to use multiple accounting methods, most crypto investors choose FIFO since it is considered the most conservative option.
Do exchanges show cost basis?
Some crypto exchanges do not show cost basis for crypto-to-crypto trades in USD terms. In this case, a crypto tax calculator like CoinLedger can help you by retrieving the historical price data for various cryptocurrencies.
How do you calculate cost basis for cryptocurrency?
To calculate your cost basis for crypto, use the following formula. Cost basis = Fair market value of crypto at the time of receipt + relevant transaction/gas fees.
How much will my crypto be taxed?
The taxes you pay on crypto vary based on several factors — such as your income level and your holding period. For more information, check out our guide to cryptocurrency tax rates.