Crypto Tax-Lot Selection: Specific Identification, Done Right

Specific identification is the only legitimate route to a HIFO/LIFO-style result in the US — and it is the one most often done invalidly, as an after-the-fact spreadsheet. This guide is what makes a lot selection valid: the timing rule, the records standard, and the per-wallet change.

TL;DR

• Specific identification = choosing which lot is sold instead of defaulting to FIFO.
• US (Rev. Proc. 2024-28): valid only if made at or before the sale, with adequate records, and per wallet/account from 1 Jan 2025.
• After-the-fact lot-picking when preparing the return is not valid — FIFO then applies.
• Adequate records = contemporaneous lot identification or standing instructions set before sales.
• A one-time safe harbor allocates pre-2025 unused basis to wallets.
• UK/France don't offer it — pooling / 150 VH bis don't select lots (see cost-basis methods).

What it is, and the condition attached

Specific identification lets you nominate the exact acquisition lot deemed sold, rather than taking the FIFO default — the mechanism behind any HIFO/LIFO-style outcome. But it is conditional. Under IRS Rev. Proc. 2024-28 the identification must be:

• made at or before the time of the sale;
• supported by adequate records;
• from 1 Jan 2025, made within the same wallet/account (per-wallet basis).

Miss any condition and it is not specific identification — the FIFO default governs.

The timing rule is the whole game

The defining failure is after-the-fact lot selection: preparing the return months later and choosing whichever lot minimises tax. That is not specific identification. The choice must be contemporaneous — at or before the sale — via:

• standing instructions configured with the broker/tool before sales occur; or
• lot-identifying metadata recorded at the time of the disposal.

"Optimised at filing time" with no contemporaneous identification fails, and the default method applies regardless of the spreadsheet.

Adequate records

The evidence must show the lot was chosen at or before the sale, not inferred later. This is the audit-trail discipline applied to lot selection.

The per-wallet change

From 1 Jan 2025, basis is per wallet/account (Rev. Proc. 2024-28). Specific identification must therefore select among lots in that same wallet — you cannot reach across wallets to find a favourable lot. The one-time safe harbor lets you allocate pre-2025 unused basis to wallets; after that, the wallet boundary constrains every identification.

Where it doesn't apply

Specific identification is a lot-based concept. The UK (share-pooling: same-day, 30-day, Section 104) and France (150 VH bis portfolio formula) do not select individual lots, so specific identification is not the mechanism there (see cost-basis methods). Attempting it in a pooling/portfolio jurisdiction is applying the wrong framework.

Practical guidance

1. Decide the lot at or before the sale — never at filing time.
2. Set standing instructions in the broker/tool before disposals occur.
3. Keep contemporaneous lot records (date, cost, units) tying sold units to a lot.
4. Respect the wallet boundary — US specific ID is per wallet/account from 2025.
5. Use the safe harbor to allocate pre-2025 unused basis to wallets.
6. Don't attempt specific ID in the UK/France — pooling / 150 VH bis apply.

How vendor tools handle lot selection

Koinly and CoinLedger support specific-identification lot selection with per-wallet logic for the US. Confirm the tool records the identification contemporaneously (or via standing instructions set in advance), enforces the per-wallet boundary from 2025, and does not present an after-the-fact lot optimiser as if it were valid specific identification.

How Wag3s helps

Wag3s Folio records lot selection at or before the disposal with per-wallet enforcement from 2025, supports standing-instruction configuration, and retains the contemporaneous records that make a specific identification valid — and falls back to pooling or 150 VH bis where lot selection does not apply. See the Folio product page.

Further reading

• FIFO vs LIFO vs HIFO for Crypto
• US Crypto Per-Wallet Cost Basis (2025)
• Crypto Cost Basis Methods 2026
• Crypto Tax-Loss Harvesting
• Crypto Audit Trail and Piste d'Audit Fiable
• Realized vs Unrealized Gains in Crypto

Sources

• IRS — Rev. Proc. 2024-28: Specific Identification at or before the sale, adequate records, per-wallet/account basis from 1 January 2025; one-time safe harbor for pre-2025 unused basis
• FIFO is the default where a valid specific identification is not made
• UK share-pooling and French article 150 VH bis do not use lot selection — GOV.UK CRYPTO22200