Cost Basis
The original purchase price of a crypto asset, used to calculate capital gains or losses for taxes.
Explained Simply
Your cost basis is what you paid for a crypto asset, including any fees. When you sell, your gain or loss is the sale price minus the cost basis. If you bought Bitcoin at multiple prices, there are different methods to calculate cost basis: FIFO (first in, first out), LIFO (last in, first out), or specific identification. Tax software automates this calculation across hundreds of transactions.
Example
You bought 0.5 BTC at $50,000 (cost basis: $25,000) and sold at $80,000 for $40,000. Your capital gain is $15,000.
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This content is for educational purposes only and does not constitute financial, tax, or legal advice. Always consult a qualified professional for advice specific to your situation.