Support Most Effective Tax Method

With your Tax methods you support FIFO, HIFO, LIFO and ACM. All of these tax methods have their pros and cons, but depending if your Capital gains tax is a loss or a gain, they can all have their disadvantages.

Professional tax software usually allows you to select the transaction you want to use as a parcel, for the buy, so that you can have the “Most effective tax method”.

I.E If you have a capital gains, you want to select the coin that has the highest cost basis.
IF you have a capital loss, you want to select the coins that has the lowest cost basis.

If your software could allow you to select this at the transaction level well you sell , or auto matched it if you selected it. That would be amazing.

Kind Regards

PLEASE add the ability to change the method on a per sales event level.

2 Likes

Any thoughts on this Koinly? It would be a great feature to be able to support, and would save your customers a lot at tax time.

I would suggest to do it like many large brokers do for stocks. They have a Tax Lot Optimizer that picks the most optimal lot to sell. It is not very complicated. Schwab, for instance, implements this feature in the following, very well-defined order:

  1. Short-term Losses: Lots reflecting short-term losses are sold first, from greatest short-term loss to least short-term loss.
  2. Long-term Losses: Lots reflecting long-term losses are sold, from greatest long-term loss to least long-term loss.
  3. Short-term, no gains nor losses: Short-term lots that reflect no gain nor loss
  4. Long-term, no gains nor losses: Long-term lots that reflect no gain nor loss
  5. Long-term Gains: Lots reflecting long-term gains from least long-term gain to greatest long-term gain.
  6. Short-term Gains: Lots reflecting short-terms gains from least short-term gain to greatest short-term gain.

Koinly already does most, if not all, of these calculations in the other methods, so it shouldn’t be very difficult or time-intensive to implement this kind of optimization as an additional accounting method option besides the others that already exist. It would truly save A LOT of users A LOT of money and it would really put Koinly (or whoever implements this feature first) ahead of the rest in terms of value the crypto accounting software space.