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# What Each Cost Basis Method Means

### Explanation of cost basis methods that you can choose from in Netrunner.

**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.
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**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.
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**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.
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**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.
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**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.
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**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.
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**Average Cost Method**

* Required in Japan, and permitted in Australia.
* **Similar to CRA/ACB:** each new purchase updates the average cost basis.
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✅ Knowing what each cost basis method means will help you choose the right one in Netrunner (see [How to Select Your Cost Basis Method](https://help.netrunner.tax/en/article/how-to-select-your-cost-basis-method-128co1j/)).