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How HIFO accounting reduces IRS bill

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Bitcoin is down around 36% from its all-time high in November, but the dip has a good side, thanks to a quirk in the tax code that helps crypto holders shield their winnings from the IRS.

The IRS treats cryptocurrencies like property, meaning that anytime you spend, exchange, or sell your tokens, you’re logging a taxable event. There’s always a difference between how much you paid for your crypto, which is the cost basis, and the market value at the time you spend it. That difference can trigger capital gains taxes.

But a little-known accounting method known as HIFO — short for highest in, first out — can significantly slash an investor’s tax obligation.

When you sell your crypto, you…



Source cnbc.com

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