Bitcoin Cost Basis Tracking in 2025 and Beyond
Most Bitcoin holders don't realize that the cost basis method they use to calculate taxes can dramatically change their tax bill and audit risk—and with new IRS reporting requirements kicking in, FIFO (First In, First Out) is becoming the automatic default unless you can prove you're using Specific Identification with proper documentation. This article breaks down the critical difference between these two methods, when each one makes sense, why the "HIFO" and "LIFO" methods you might have used before aren't actually IRS-approved, and what you need to do before 2026 to lock in the most tax-efficient approach while you still have time to clean up your records.
