FIFO Crypto Tax Explained: Cost Basis Without the Headache

When you sell crypto, your taxable gain is proceeds minus cost basis — what you originally paid for the coins you sold. The question is: which coins did you sell? FIFO (first-in, first-out) answers: the oldest ones.

A worked example

• Jan 10: buy 0.5 BTC at $40,000
• Mar 5: buy 0.5 BTC at $60,000
• Jun 1: sell 0.7 BTC at $70,000

Under FIFO the sell consumes the January lot first: 0.5 BTC × $40,000 = $20,000 basis, then 0.2 BTC from the March lot: 0.2 × $60,000 = $12,000. Total basis $32,000 against proceeds of $49,000 — a realized gain of $17,000. You still hold 0.3 BTC with a basis of $18,000.

Short-term vs long-term

In the US, coins held longer than one year qualify for lower long-term capital gains rates (0/15/20% depending on income), while shorter holds are taxed as ordinary income. Under FIFO your oldest — most likely long-term — lots go first, which is often tax-favorable. Other countries differ: some have no long-term discount, some tax crypto as income entirely. Always confirm your local rules.

Records you must keep

• Date and time of every buy, sell, swap and spend
• Amount and per-unit price in your fiat currency
• Fees paid — they adjust basis or proceeds
• Wallet/exchange the transaction happened on

Paste your trades into our FIFO tax calculator to see realized gains, the short/long-term split and remaining cost basis instantly. For exchange-wide imports and filing-ready reports, dedicated tax software is worth the fee.