FIFO meaning "first bought" or "first deposited?"

Tax Questions
#1

Does anyone know if FIFO means “first purchased” or “first deposited” in cryptocurrency tax? If I have two Bitcoins in a wallet; one I bought in 2016 and the other in 2019. I transferred the 2019 coin to the wallet first. Which of the two coins gets withdrawn first under the FIFO rule? I heard two contradicting answers. Please site the source.

#2

I just learned this from Koinly chatbot…

In Koinly, the FIFO (First In, First Out) method typically considers the “first purchased” cryptocurrency. However, when wallet-based cost tracking is enabled, it’s the date of transfer to the wallet that determines which lot FIFO will select, not the original purchase date.

For your specific scenario with two Bitcoins:

  1. If wallet-based cost tracking is disabled, the 2016 Bitcoin would be considered “first in” and would be withdrawn first.
  2. If wallet-based cost tracking is enabled, the 2019 Bitcoin that was transferred to the wallet first would be considered “first in” and would be withdrawn first.
#3

Hi @peacew6

This has changed. FIFO is determined by the original acquisition date of the asset, not the date of transfer to the wallet.

Check out the article below regarding how cost basis is applied when you have Wallet-based cost tracking on.

Settings > Wallet-based cost tracking