Crypto Cost Basis Method Calculator 2026 β FIFO vs LIFO vs HIFO vs Specific ID
Compare all four cryptocurrency cost basis methods on the same transactions. See which method minimizes your capital gains tax: FIFO, LIFO, HIFO, or Specific ID.
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Best Method (Min. Tax)
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Minimum Tax Possible
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Worst Method (Max. Tax)
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Tax Difference (Best vs Worst)
Method Comparison
| Method | Cost Basis Used | Gain / (Loss) | ST/LT Split | Tax Owed | Savings vs FIFO |
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How the Four Cost Basis Methods Work
When you sell cryptocurrency, you must determine which "lots" (purchases) you are selling. The method you choose determines your cost basis, which directly determines your gain or loss and whether it is short-term or long-term.
Method Definitions
FIFO: Sell oldest lots first (default IRS method)
LIFO: Sell newest lots first (reduces gain in rising markets if recent lots are expensive)
HIFO: Sell highest-cost lots first (minimizes total gain regardless of date)
Specific ID: Choose any lots β optimal strategy requires careful documentation
Example Setup
3 lots of BTC, selling 3 units at $50,000 each ($150,000 total proceeds):
Lot 1: 2 units at $20,000 (bought Jan 2024) β long-term
Lot 2: 3 units at $35,000 (bought Jun 2025) β short-term
Lot 3: 2 units at $45,000 (bought Mar 2026) β short-term
FIFO basis: 2Γ$20K + 1Γ$35K = $75K | Gain: $75K (mix of ST/LT)
HIFO basis: 2Γ$45K + 1Γ$35K = $125K | Gain: $25K (all short-term)
Lot 1: 2 units at $20,000 (bought Jan 2024) β long-term
Lot 2: 3 units at $35,000 (bought Jun 2025) β short-term
Lot 3: 2 units at $45,000 (bought Mar 2026) β short-term
FIFO basis: 2Γ$20K + 1Γ$35K = $75K | Gain: $75K (mix of ST/LT)
HIFO basis: 2Γ$45K + 1Γ$35K = $125K | Gain: $25K (all short-term)
Extended
Lot-by-Lot Breakdown
See the full lot-level detail for each cost basis method showing exactly which units were sold
Full lot-by-lot breakdown for each method showing exactly which units are sold and at what cost basis.
Frequently Asked Questions
What are the four cryptocurrency cost basis methods?
The four methods are: (1) FIFO (First In, First Out) β sell oldest coins first, IRS default; (2) LIFO (Last In, First Out) β sell newest coins first; (3) HIFO (Highest In, First Out) β sell highest-cost coins first, minimizes gains; (4) Specific Identification β you choose exactly which lots to sell, requires adequate records at time of sale. Each method can produce very different tax outcomes on identical transactions.
Which cost basis method minimizes crypto taxes?
HIFO (Highest In, First Out) typically produces the lowest taxable gain because it assumes you sell your most expensive coins first, maximizing your cost basis. However, the optimal method depends on your specific lot prices and holding periods. Sometimes using Specific ID to preserve long-term lots is better than HIFO if HIFO would force you to use short-term lots. This calculator shows all four methods so you can compare.
Is HIFO allowed by the IRS for cryptocurrency?
Yes, HIFO is an IRS-accepted cost basis method for cryptocurrency when using Specific Identification. To use HIFO (or any Specific ID method), you must adequately identify which specific units you are selling at the time of the sale β typically by referencing the specific lot (exchange, date, amount). Simply claiming HIFO after the fact without documentation is not sufficient. Keep records of each lot and your identification choices.
Can I change my cost basis method each year?
Yes, but with restrictions. For cryptocurrency, you can select a different method for each exchange or wallet, and potentially for each year. However, once you have reported using a specific method for a given exchange/wallet, consistency is expected. FIFO is the default if you do not specify. If you want to use Specific ID, you need to document the choice at the time of each sale β not retroactively.
What records do I need to use Specific Identification?
For Specific ID, you need: the date and time each unit was acquired, the amount paid per unit, the exchange or wallet where it was held, and a record showing which specific lots you designated for each sale at the time of the sale. Many crypto tax software tools (CoinTracker, Koinly, TaxBit) can help track this automatically. Without adequate records, the IRS will default to FIFO.