Ledgible Tax defaults to calculating taxes using the **First-In First-Out (FIFO)** calculation method. If you wish to change the tax method for a client to **Last-In First-Out (LIFO)** or **Highest-In-First-Out (HIFO)**, see the instructions below.

## Warning

Changing your tax method has a large impact on your tax data and can affect tax liability for multiple tax years. This action **should not** be performed without a clear understanding of the impact. See questions 39 through 41 of the [IRS's Virtual Currency FAQ](https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions#collapseCollapsible1614795059293) for more information.

If you do change your tax method, you must [re-run the tax update](https://support.ledgible.io/hc/en-us/articles/360058732512) process to update all transaction data under the new method. Please note this process may take a long time to complete.

## Tax Calculation Methods

- **FIFO**: Stands for **First-in First-out**. The first coin that was purchased (chronologically) is the first coin that is applied for a disposal.
- **LIFO**: Stands for **Last-in First-out**. The last coin that was purchased is the first coin that is applied for a disposal.
- **HIFO**: Stands for **Highest-in First-out**. The highest cost coin that was purchased is the first coin that is applied for a disposal.

**To change the client's tax calculation method:**

- [Open the client's account](https://support.ledgible.io/hc/en-us/articles/360057911812) from your **[Client Management](https://app.ledgible.io/tax-preparer)** dashboard.

- Select the **Settings** button on the top right.

- Scroll down to **Tax Settings** and click **Change** next to Tax Calculation Method.

- Change the **Select Tax Calculation Method** drop down menu to the desired method. You can select from **FIFO**, **LIFO**, or **HIFO**.

- Review any messages regarding historical data if shown and select **Confirm** if you wish to continue.

- Select **Close** on the confirmation window to return to the client dashboard.

- [Re-run the Tax Update process](https://support.ledgible.io/hc/en-us/articles/360058732512) to update all transaction data under the new method. Please allow ample time for this process to complete.