Cryptocurrency Tax Accounting Decoded- Using HIFO Tax Accounting to Shield Crypto Gains from the IRS
By Anthony Diosdi Cryptocurrencies are considered property in the United States for income tax purposes. Treating cryptocurrencies as property and not currency for federal income tax purposes is a departure from the rest of the world. Gain or loss is recognized and taxable, every time cryptocurrency is sold or used to purchase other virtual currency. To determine the amount of taxable gain, a cryptocurrency holder must know the basis of the cryptocurrency and the fair market value of the cryptocurrency when sold or exchanged. The fair market value of cryptocurrency is not always easy to determine. If cryptocurrency is obtained through an exchange, the fair market value of the digital asset is the amount recorded by the exchange on the date of the transaction. If a cryptocurrency transaction is not…