Accounting methods · 5 min
HIFO cost basis for crypto
Highest-In, First-Out can minimize recognized gains by disposing of your most expensive lots first.
Highest-In, First-Out (HIFO) matches disposals against your highest cost lots first. Among permitted methods, HIFO often minimizes recognized capital gains because expensive lots reduce taxable profit before cheaper lots are touched.
When traders consider HIFO
Active traders with layered entries at different prices may want to model HIFO outcomes before year-end — especially if newer purchases were at higher prices during bull markets. CryptoTax8949 lets you compare method results before committing to a filing position.
Record-keeping requirement
Like specific identification, aggressive use of HIFO assumes your records can substantiate lot tracking across transfers. That is why transfer matching is not optional infrastructure — it is the foundation that makes HIFO defensible.