Cost Basis Calculation

The cost basis calculation refers to the process of determining the original value of a cryptocurrency investment for tax purposes. This includes the purchase price of the cryptocurrency, as well as any fees, commissions, or other expenses associated with the acquisition. When the cryptocurrency is sold or exchanged for another asset, the selling price is compared to the cost basis to determine the capital gain or loss, which is then subject to taxation. The calculation of the cost basis can be complicated by factors such as the use of multiple exchanges or wallets, the conversion of one cryptocurrency to another, and the use of cryptocurrency as payment for goods or services.