Specific identification

For crypto, how you identify units depends on who holds them. In a self-custody wallet, you record the units in your own books no later than the date and time of the sale. Any identifier that pins them down works, such as the purchase date and price.

At an exchange, you tell the broker which units to sell by the time of the sale, and a standing order counts. If your broker offers only one method, you are treated as having chosen it by standing order. Through December 31, 2026, IRS relief also lets you record your choice for broker-held units in your own books.

If you identify nothing, the default is first in, first out (FIFO): the earliest units you acquired count as sold first. You can instead set a standing rule, such as highest cost first. Averaging the cost of all your units is generally not an option for crypto. Switching rules is not a change in accounting method. Picking lots at tax time, after the sale, is too late.