What Is Specific Identification? Crypto Tax Lots Explained Simply

What Is Specific Identification?

Published 2026-08-15. Last updated 2026-08-15. Written by John Alewine, Crypto Guidance Inc.

Specific identification is the tax method where you point at the exact lot you disposed of: these 0.1 BTC bought on this date at this basis, not "whatever is oldest." The IRS treats crypto as property. If you can identify the units, you can often choose a high-basis lot to cut the gain, or a loser lot to harvest a loss. If you cannot identify them, you fall back to FIFO, first in, first out, in many ordinary cases. Confirm with a tax pro. I am not one.

Who This Is For

U.S. people who sold or swapped more than once and who kept records. It is not a magic eraser. It is a filing method that needs timestamps, cost, and a trail from the wallet or exchange. If your history is a dozen apps and no spreadsheet, start with cost basis and the tax guide before you get clever.

How It Actually Works

Each buy is a lot. Each sale has to attach to lots. Specific ID means you specify the lot at the time of the sale, in a way your records can show later.
Exchanges often default to FIFO on their 1099 math. Your 1099-DA may not match the method you intended if you transferred coins in. Wallet-by-wallet rules make this worse, not better.
Prepaid card swipes (see the cards page) are lots leaving. So are swaps on a DEX.

Risks I See in Sessions

Picking lots after the fact to paint the return you wanted, with no contemporaneous record. That is how people get into trouble.
Ignoring transfers. Moving coins to your hardware wallet is not a sale. Losing the basis when you move them is how FIFO wrecks a later year.
Mixing ETF shares and actual coins. Different product, different rules, including wash sales on the ETF side.

When It Matters

Every December while you can still harvest, and every April when the forms arrive. Pair with Form 8949 and the estimator.