FIFO is the IRS default method for matching which specific units are considered sold when multiple purchase lots exist at different prices.
How it works
The oldest lot is matched first, then the next oldest, until the sale quantity is fully accounted for. Multiplying each matched portion by its original purchase price gives the total cost basis, subtracted from sale proceeds to find the gain.
What this does not include
This handles two purchase lots — a real trading history often involves many more lots across multiple transactions, requiring the same FIFO logic extended across every lot in chronological order.
How to use this calculator
- Enter quantity and price per unit for two purchase lots, then the quantity and price of the sale.
Frequently asked questions
Can I use a method other than FIFO for crypto?
Yes — specific identification is allowed if adequate records are kept showing exactly which units were sold, potentially allowing a taxpayer to choose higher-basis lots to minimize gain; FIFO is simply the default absent such records.
Does the wash sale rule apply to cryptocurrency?
Not currently — the wash sale rule (covered by this site’s separate wash-sale calculator) has historically applied to securities, not cryptocurrency, though this is an area that could change with future legislation.
Is cryptocurrency taxed as property?
Yes — the IRS treats digital assets as property for tax purposes, meaning general capital gains and loss principles (including cost basis tracking) apply the same way as with stocks.
