Cost Basis Methods
Last updated March 28, 2026 · Super Admin
Cost Basis Methods
CryptaCount supports eight cost basis methods.  The choice of method determines how the platform calculates gains and losses when you dispose of an asset — and in many jurisdictions, this choice has direct tax implications.
Overview of Methods
Historic FIFO — Historic First In, First Out
The oldest acquired units are treated as disposed first. Uses one-way impairment (write down only, no write-up). This is the standard method for tax reporting in many jurisdictions (US, UK, several EU states).
Example: You purchased 2 ETH at €1,800 in January and 3 ETH at €2,400 in March. When you sell 1 ETH in June at €2,600, Historic FIFO uses the January cost (€1,800), resulting in a €800 gain.
Historic Weighted Average — Historic Weighted Average
All units of an asset are blended into a single average cost using weighted average. No impairment adjustments are applied. Simplified method suitable for tax reporting.
Example: After the two purchases above, the weighted average cost is: (2 × €1,800 + 3 × €2,400) / 5 = €2,160. Selling 1 ETH at €2,600 produces a €440 gain.
FMV — Fair Market Value (Mark-to-Market)
Assets are marked to market at their current fair market value. Unrealized gains and losses are recognized. This is primarily used by trading firms and certain fund structures.
NRV + FIFO — Net Realizable Value (FIFO Basis)
Applies the IAS 2 "lower of cost and net realizable value" principle using FIFO for lot ordering. Two-way impairment (write down and write-up, but not above original cost). This is the IFRS-aligned method for entities classifying crypto-assets as inventory.
NRV + Weighted Average — Net Realizable Value (WAVG Basis)
Same as NRV + FIFO but uses weighted average cost as the comparison basis. Also uses two-way impairment.
LIFO — Last In, First Out
The most recently acquired units are treated as disposed first.
:::caution LIFO is not permitted in all jurisdictions. Verify with your tax adviser before selecting this method. :::
HIFO — Highest In, First Out
The highest-cost units are treated as disposed first. This minimizes realized gains (or maximizes realized losses), which can be advantageous for tax optimization where permitted.
Specific Identification — Specific Identification
The user (or their accountant) selects which specific lots to dispose in each transaction. This provides maximum control over gain/loss timing and is permitted in jurisdictions that allow taxpayer lot selection (including the US).
Specific lot selection is managed through the Lot Viewer under Balances → Lots.
:::tip Specific Identification requires manual lot selection for each disposal. It is best suited for large, deliberate transactions where lot choice materially impacts the tax outcome — not for high-volume trading accounts. :::
Three-Level Resolution Hierarchy
You don't need to pick a single method for your entire portfolio. CryptaCount resolves the cost basis method through a three-level hierarchy:
Level 1: Per-asset override — Set a method on a particular asset. Example: "Use HIFO for LINK." This takes highest precedence.
Level 2: Asset class level — Set a method for an asset class. Example: "Use Historic Weighted Average for all stablecoins." This applies to all assets in that class unless overridden at Level 1.
Level 3: Workspace default — The workspace-level default set under Settings → Workspace Accounting. Example: "Use Historic FIFO." This applies to everything not overridden at Levels 1 or 2.
How to Configure
1. Workspace default — Go to Settings → Workspace Accounting and select the default cost basis method 2. Asset class level — Go to Settings → Asset Registry, select an asset class, and set the method override 3. Per-asset — Select an individual asset and set the method override
Practical Example
A Luxembourg accounting firm managing a client portfolio might configure:
- Workspace default: Historic FIFO (standard for Luxembourg)
- Stablecoins asset class: Historic Weighted Average (blended cost is more meaningful for stable-value assets)
- ETH (specific asset): Specific Identification (client has a large position where lot selection matters)
Comparing Methods
You can run reports under multiple methods simultaneously to compare outcomes. This is useful for tax planning and audit purposes.
Jurisdiction-Specific Requirements
Some jurisdictions mandate a specific method. The platform's 73-jurisdiction tax profiles indicate which methods are permitted, recommended, or required.
| Jurisdiction | Required/Recommended Method | Notes | |---|---|---| | France (individuals) | Historic Weighted Average (mandatory) | Portfolio-wide weighted average formula | | Japan | Historic Weighted Average (required) | Total average method for all individuals | | US | Historic FIFO (default) | Others permitted if consistently applied | | Germany | Historic FIFO (standard practice) | Not strictly mandated but expected by Finanzamt | | Australia | Historic FIFO, LIFO, HIFO, Specific Identification | Taxpayer's choice, must be consistent | | UK | Section 104 pooling (Historic Weighted Average equivalent) | 30-day bed-and-breakfast rule applies |
:::caution Tax method requirements change. Always verify current rules with a qualified tax adviser for the specific jurisdiction. CryptaCount provides data — it does not provide tax advice. :::
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