Comparing tax strategies: HIFO vs. LIFO vs. FIFO [OC] Comparison

What This Visualization Shows

This data visualization displays "Comparing tax strategies: HIFO vs. LIFO vs. FIFO [OC]" and provides a clear visual representation of the underlying data patterns and trends. The visualization focuses on With stocks or crypto, I have come to understand that how much you pay in capital gains tax depends on how much profit you made, but that there are different ways to calculate this and this impacts the tax amount. If you've bought stocks for $5 and $20, and sell for $15, then you can say whether this sale was from the $5 purchase (giving a $10 profit) or from the $20 purchase (giving a $5 loss).

But you do need to keep track of what is sold when. For this, you can use different strategies. You might use a FIFO strategy, or First In First Out, where the historically earliest purchase is the one you always sell off first. Or LIFO, Last In First Out, where it is rather the most recent purchase you sell off first. Or for minimizing profits, HIFO, Highest In First Out; i.e. that you sell off the most expensive purchase first.

Figured I could simulate an example of this using random ETH data, using ggplot2 in R and Google Gemini to help me vibe code the graphs. White dots are purchases, black dots are sales (not fixed amounts). Upward curves signify profits, downward curves signify losses. Colors represent amounts involved in each sale.

What we see here is very clearly how the same transaction history results in almost only profits with the FIFO strategy, less so with LIFO, but only losses with the HIFO strategy.

I very much enjoyed this visual, and hope others appreciate it too., which allows us to understand complex relationships and insights within the data through visual storytelling.

Deep Dive into the Topic

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Data Analysis and Insights

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