How to separate FIFO with co-ownership portfolios?
Before we get into the flour, let us remind you that FIFO (English abbreviation for first inAnd the first of) is the method used by the treasury to calculate the effect of a change in equity of a replaceable asset after it has been transferred or sold. For this, it takes for reference the oldest assets and their price, regardless of any other factor such as the means of acquisition or their location. Sold inventories are valued at the oldest units.
In a practical way, as an example, we can consider the case of a person who acquired 300 bitcoins in 2015 on three exchanges or exchanges different, at a rate of 100 each. The Treasury does not differentiate and considers that the 300 assets share the same global basket that they will exit (regardless of whether they operate in another market or market or exchange) in successive years.
Any output will be tied to the time it was entered and the price set at that time: these are the only labels that each digital asset has to account for the increase (capital gain) or decrease (loss) of equity on various transfers.
In other words, crypto assets destined for long-term investment will be depreciated in short-term movements because in the eyes of the treasury they are the same, and do not characterize the market or exchange in which they are located.
See the previous article: https://cryptoplaza.es/hacienda-fifo-cryptomonedas-vikay/
Now, there are alternatives to prevent FIFO from consuming the oldest cryptocurrency and thus be able to hanging Without affecting us: like the property society or the hereditary civil society.
The contribution that occurs in these correlations between normal people allows the creation of two portfolios that pass through different FIFOs, i.e. the FIFOs are broken in order to remain ‘pooled’. One is individual and the other is jointly owned (expressed through the personalities of the property community or civil society). Both can be used to “circulate” (by positioning crypto assets to accumulate unrealized underlying value), or “trade”, if preferred (short term negotiation), without amortizing first-in first-out (FIFO).
But let’s go back to the field of assumptions to visualize this approach from practice:
- Two people marry under the communal property system, which is the reason for the establishment of “community joint property”. One of the spouses inherited shares in a company and cryptocurrency. The ownership of these last assets will remain individual after marriage (although the fruits or yield are matrimonial) but the new investments will be matrimonial and the new investments of each spouse (private and matrimonial) will be separately to obtain different baskets.
- Another assumption arises in the civil society scenario. Two people also contribute shares in the company’s assets and cryptocurrency. Both are 50% off. Then each one will carry out different actions based on his goals or interests, but individually, so that he will pay taxes and the inherited changes will be counted privately without affecting civil society, which can remain, for example, in Hodel.
- A final example is the marital partnership (property) which is undone without distribution, leaving the previous marital property and the next and subsequent property exclusive. For example, in the event that a spouse executes a transaction to buy and sell cryptocurrencies later after the said separation of assets, the ownership before the separation will be jointly owned and the subsequent private, both with different FIFOs as well.
The added advantage of joint work is that asset management and accounting are done jointly, without managing two different portfolios, which simplifies accounting times and costs, as well as handling or management.
We hope we have clarified a few things about your cryptocurrency operations. Don’t miss our next article on “Negative Tax Effects on liquidity pools. Analyze and propose a fair and adequate accounting and financial alternative.
By Pablo and Alejandro Rodriguez