FIFO / LIFO
Accounting methods (First In First Out / Last In First Out) that determine which crypto purchase lots are sold first for tax purposes.
Explained Simply
FIFO (First In, First Out) assumes you sell your oldest coins first. LIFO (Last In, First Out) assumes you sell your newest coins first. The method you choose affects your tax bill significantly. FIFO often results in long-term capital gains (lower tax rate) since older lots have been held longer. LIFO may result in smaller gains if recent purchases were at higher prices. The IRS allows specific identification, where you choose exactly which lot to sell. Consistency matters — pick a method and stick with it.
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