Crypto Tax Basis Tracking Methods Guide for Cost Documentation (2026)
Track crypto cost basis methods: FIFO, LIFO, specific identification, HIFO, and basis method selection for tax optimization.
Summary
Basis method affects tax liability. This guide explains FIFO, LIFO, specific ID, HIFO tracking, and method selection criteria.
Key Steps
- 1Understand FIFO: first-in, first-out, default method, oldest coins sold first.
- 2Evaluate LIFO: last-in, first-out, most recent coins sold, may reduce short-term gains.
- 3Apply specific ID: identify exact coins sold, requires detailed documentation.
- 4Consider HIFO: highest-in, first-out, sells highest-cost coins first, minimizes gains.
- 5Document method choice: IRS requires consistent method, maintain documentation.