Crypto Tax Cost Basis Calculator – FIFO, LIFO & HIFO Capital Gains Optimizer

IRS Cryptocurrency Taxation & Accounting Method Rules

Under IRS Notice 2014-21 and subsequent Treasury regulations, cryptocurrency is treated as property rather than foreign currency. Every crypto-to-fiat sale, crypto-to-crypto trade (e.g. swapping BTC for ETH), or purchase of goods constitutes a taxable capital gains realization event.

Accounting Methods: FIFO vs LIFO vs HIFO

• FIFO (First-In, First-Out): The IRS default assumption. Assumes the earliest coins purchased are the first ones sold. In a multi-year bull market, FIFO usually yields the highest taxable gains because older coins were acquired at lower prices.
• HIFO (Highest-In, First-Out): Sells the most expensive coins first, maximizing your cost basis and minimizing your immediate taxable gain or generating capital losses.
• LIFO (Last-In, First-Out): Sells the most recently acquired coins first.

Specific Identification Requirements

To use HIFO or Specific Identification rather than default FIFO, the IRS requires taxpayers to document specific records for each transaction: exact date and time of acquisition, cost basis, transaction hashes, and wallet addresses.

Frequently asked questions

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