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R102 – What Each Cost Basis Method Means

Netrunner supports multiple cost basis methods, depending on your country’s tax rules. This article explains what each method means so you can choose the right one for your reports.

Updated over 2 weeks ago

FIFO (First In, First Out)

→ The first assets you purchase are the first assets you sell.

→ Common in the United States, Europe, and many other countries.

Example: If you bought 1 $SOL at $20 and another 1 $SOL at $40, then sold 1 $SOL, the sale would use the $20 cost basis.


LIFO (Last In, First Out)

→ The most recent assets you purchase are the first assets you sell.

→ Sometimes permitted in the U.S. and Italy.

Example: Using the same scenario, the 1 $SOL sold would use the $40 cost basis.


HIFO (Highest In, First Out)

→ The assets with the highest purchase price are sold first.

→ Often used to minimize taxable gains.

Example: If you bought 1 $SOL at $20 and another at $40, the $40 purchase would be used as the cost basis.


LCFO (Lowest Cost, First Out)

→ The assets with the lowest purchase price are sold first.

→ Can maximize gains (and therefore taxes).

→ Example: In the same scenario, the $20 purchase would be used as the cost basis.


HMRC (Share Pooling)

→ Required in the United Kingdom.

→ Assets of the same type are grouped into “pools” with an average cost basis.

→ Sales are matched against the pool rather than individual purchase lots.


CRA (Adjusted Cost Basis, ACB)

→ Required in Canada.

→ Each purchase adjusts the average cost basis of your holdings.

→ Sales are matched against the new adjusted average.


Average Cost Method

→ Required in Japan, and permitted in Australia.

Similar to CRA/ACB: each new purchase updates the average cost basis.


✅ Knowing what each cost basis method means will help you choose the right one in Netrunner (see HT202 – How to Select Your Cost Basis Method).

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