Changing your Tax Calculation Method (FIFO/LIFO/HIFO)

Ledgible Crypto Tax defaults to calculating taxes using the First-In First-Out (FIFO) calculation method.  If you wish to change the tax method to Last-In First-Out (LIFO) or Highest-In First Out (HIFO), see the instructions below.

This article includes the following sections:

• Warning
• Tax Calculation Methods
• Step-By-Step Instructions
• Helpful Hints

Warning

Changing your tax method has a large impact on your tax data and can affect tax liability for multiple tax years. This action should not be performed without a clear understanding of the impact.  See questions 39 through 41 of the IRS's Virtual Currency FAQ for more information.

If you do change your tax method, you must re-run the tax update process to update all transaction data under the new method. Please note this process may take a long time to complete.

Tax Calculation Methods

• FIFO: Stands for First-in First-out. The first coin that was purchased (chronologically) is the first coin that is applied for a disposal.
• LIFO: Stands for Last-in First-out. The last coin that was purchased is the first coin that is applied for a disposal.
• HIFO: Stands for Highest-in First-out.  The coin with the highest cost basis (acquisition cost) is the first coin that is applied for a disposal.

Step-By-Step Instructions

1. Log in to your Ledgible Crypto Tax dashboard.
   
   
2. Select the Settings button on the top right.
   
   
3. Under Account Details, click the Update button to the right of the Tax Calculation Method heading.
   
   
4. Change the Select Tax Calculation Method drop down menu to the desired method.  You can select from FIFO, LIFO, or HIFO.
   
   
5. Review any messages regarding historical data if shown and select Confirm if you wish to continue.
   
   
6. Select Close on the confirmation window to return to your dashboard.
   
   
7. Re-run the Tax Update process to update all transaction data under the new method.  Please allow ample time for this process to complete.

 Helpful Hints

• The tax year and calculation method are shown below your account name at the top left of all Ledgible pages. 
• To change the tax calculation method back, simply follow the same steps and choose the original method.