Skip to main content

When Might a Trader Prefer the Specific Identification Method over FIFO?

A trader would prefer the Specific Identification method when they want to minimize their immediate tax liability or achieve a specific tax outcome. For instance, they can choose to sell the lot with the highest cost basis to minimize capital gains, or sell a lot held for over a year to realize a lower-taxed long-term capital gain, optimizing their tax strategy.

How Does the 60/40 Rule Compare to Standard Short-Term Capital Gains Tax Rates?
How Does the Specific Identification Method Differ from FIFO for Crypto Taxes?
What Are the Potential Tax Implications of Investing in a Synthetic ETF versus a Physically-Backed One?
How Are Capital Gains Typically Classified for Crypto Spot Trading?