Which transactions belong to disposal?

Like the acquisition of crypto assets, most crypto assets outflows are considered disposals. According to the provisions of ASU 2022-03, transactions involving crypto assets outflows such as staking and lending do not belong to disposals. The following figure shows elven's classification criteria for whether business activities constitute crypto assets disposal:

Matching cost basis

When disposing of crypto assets, it is necessary to calculate profits and losses based on the difference between the disposal price and the cost basis. The matching rules for cost basis depend on the cost basis method you choose: FIFO, LIFO, HIFO, Specific ID, or weighted average method. Taking FIFO as an example, when disposing of crypto assets, you need to match costs from the earliest batch of this type of crypto assets. If there is insufficient balance in that batch, costs should be matched in chronological order from earlier batches to later ones.

Gain/Loss of a single transaction.

MarketValueCostBasis=RealizedGain/LossMarket Value - Cost Basis = Realized Gain/Loss

FeeMarketValueFeeCostBasis=FeeRealizedGain/LossFeeMarketValue - FeeCostBasis = FeeRealizedGain/Loss

If the transaction amount is greater than the cost amount, the difference is the gain from asset disposal; if the actual transaction amount is less than the cost amount, the difference is the loss from asset disposal. The gas fee involved in transactions belongs to crypto assets disposal and also needs to be matched to calculate gains and losses. Using this calculation method can obtain realized gains or losses for each crypto asset disposal transaction.

Gain/Loss of accounting period

By adding up the gains and losses from all crypto assets disposal transactions during the accounting period, you can obtain the realized gain/loss caused by the disposal of crypto assets in that accounting period.

By adding up the gains and losses from various transactions separately, the realized gains and realized losses for the accounting period can be obtained.

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