Request Accounting calculates your capital gains or losses based on the cost basis method you select. Your cost basis is the original purchase price of your assets.
When you sell, the method you choose determines which specific purchases are considered sold, affecting your taxable outcome.
Formula: Gain or Loss = Sale Proceeds - Cost Basis
Note: All purchase prices in the examples below are per BTC (per unit).
Available Methods
FIFO (First In, First Out)
Sells your oldest assets first. Uses the purchase price from your earliest acquisitions.
Example: You buy 1 BTC at $30,000, then 0.5 BTC at $40,000. When you sell 1.2 BTC for $50,000 total, FIFO uses:
1 BTC at $30,000 = $30,000
0.2 BTC at $40,000 = $8,000
Cost basis: $38,000
Gain: $50,000 - $38,000 = $12,000
LIFO (Last In, First Out)
Sells your newest assets first. Uses the purchase price from your most recent acquisitions.
Example: You buy assets at different prices, most recently 0.2 BTC at $45,000 and 0.3 BTC at $50,000. When you sell 0.5 BTC for $22,500 total, LIFO uses:
0.2 BTC at $45,000 = $9,000
0.3 BTC at $50,000 = $15,000
Cost basis: $24,000
Loss: $22,500 - $24,000 = -$1,500
Average Cost (AVG)
Averages all purchase prices together. Calculates a weighted average cost per unit across all purchases.
Example: Your total purchases are 2 BTC costing $74,000 total. Average cost per BTC is $37,000. When you sell 0.6 BTC for $24,000 total:
0.6 BTC at $37,000 average
Cost basis: $22,200
Gain: $24,000 - $22,200 = $1,800
HIFO (Highest In, First Out)
Sells your highest-cost assets first. Prioritizes the most expensive purchases, minimizing capital gains.
Example: You buy 0.2 BTC at $25,000 (highest), 0.5 BTC at $20,000, 0.3 BTC at $15,000, and 1 BTC at $10,000. When you sell 0.6 BTC for $15,000 total, HIFO uses:
0.2 BTC at $25,000 = $5,000
0.4 BTC at $20,000 = $8,000
Cost basis: $13,000
Gain: $15,000 - $13,000 = $2,000
LOFO (Lowest In, First Out)
Sells your lowest-cost assets first. Prioritizes the cheapest purchases, maximizing capital gains or realizing losses.
Example: Using the same purchases as HIFO, when you sell 0.6 BTC for $15,000 total, LOFO uses:
0.6 BTC at $10,000
Cost basis: $6,000
Gain: $15,000 - $6,000 = $9,000
HAFO (Highest Amount First Out)
Sells from your largest purchase quantities first. Prioritizes transactions where you bought the most units.
Example: You bought 1 BTC at $10,000 (largest quantity), 0.5 BTC at $20,000, 0.3 BTC at $15,000, and 0.2 BTC at $25,000. When you sell 0.6 BTC for $15,000 total, HAFO uses:
0.6 BTC from the 1 BTC purchase at $10,000
Cost basis: $6,000
Gain: $15,000 - $6,000 = $9,000
LAFO (Lowest Amount First Out)
Sells from your smallest purchase quantities first. Prioritizes transactions where you bought the fewest units.
Example: Using the same purchases as HAFO, when you sell 0.5 BTC for $12,500 total, LAFO uses:
0.2 BTC at $25,000 = $5,000
0.3 BTC at $15,000 = $4,500
Cost basis: $9,500
Gain: $12,500 - $9,500 = $3,000
Comparing Methods
Different methods produce different results for the same sale:
If you sell 0.6 BTC for $15,000 total:
HIFO (cost basis $13,000): Gain = $2,000
LOFO (cost basis $6,000): Gain = $9,000
Higher cost basis = Lower gains (or larger losses)
Lower cost basis = Higher gains (or smaller losses)
Choosing a Method
Consult with a tax professional to determine which method is appropriate for your situation. Some methods may not be permitted in all jurisdictions, and your choice may have significant tax implications.