What is cost basis in crypto taxes?

One of the most misunderstood concepts in crypto taxes is cost basis or, simply, what you paid to acquire a crypto asset. It's a very important number because you have to know what it is to know how much you owe in taxes. What is cost basis?

How do I calculate my crypto taxes?

You subtract your cost basis from the price you sold your asset for to calculate your capital gains or losses. This sounds simple, but there are many cost basis methods available to pick from when calculating your crypto taxes. To further complicate things, many countries have stringent rules regarding which cost basis method to use, and when.

How do I find the cost basis of my cryptocurrency?

If you’ve purchased your cryptocurrency on an exchange like Coinbase, you can find your cost basis by looking at your exchange records. However, exchanges won’t know your cost basis in cases where you transferred your cryptocurrency. What happens when you don’t know the cost basis of your cryptocurrency?

What is crypto tax & how does it work?

In the case of crypto tax, the cost basis is the original price plus any related fees, of the crypto on the day you took ownership of it - whether you bought it, were gifted it or had it airdropped to you. When calculating the cost of an asset you purchased, you can also add any transaction fees you paid when you bought/sold it.