GlossaryIntermediate
Average Cost Basis
A cost-basis accounting method that averages the purchase price across all units of an asset held, rather than tracking individual units separately.
Average cost basis is a cost-basis accounting method that calculates a single average purchase price across all units of an asset currently held, rather than tracking each individual purchase lot's own specific cost basis separately.
This generally simplifies recordkeeping compared to lot-based methods like FIFO or specific identification, at the cost of less control over which specific gain or loss is realized on a given sale — whether it's a permitted method for crypto varies by jurisdiction. See Kaavon's "Crypto Cost Basis and Accounting Methods" guide for how it compares to the alternatives.
Examples
- Under average cost basis, buying the same asset at several different prices results in one blended average cost figure applied to every unit held.
- Average cost basis is simpler to maintain than lot-based methods, but offers less flexibility in choosing which specific gain or loss to realize.