Take Control of Your Tax Outcomes with SPEC ID Lot Selection

When you sell cryptocurrency, which units are you actually selling? With automatic methods like FIFO, you don’t get a choice. Today we’re launching SPEC ID (Specific Identification)—giving you complete control over lot selection for maximum tax efficiency.

The Problem: One Size Doesn’t Fit All

Automatic costing methods apply the same logic to every sale:

You own 3 BTC purchased at different times:
  Lot A: Jan 2023 @ $20,000 (held 2 years - long-term)
  Lot B: Mar 2024 @ $65,000 (held 9 months - short-term)
  Lot C: Oct 2024 @ $70,000 (held 2 months - short-term)

Today: Sell 1 BTC at $95,000

FIFO automatically uses Lot A:
  Proceeds: $95,000
  Cost Basis: $20,000
  Gain: $75,000 (taxable as long-term)

But what if you wanted to realize a smaller gain?
Or harvest losses from a different asset?

With FIFO, LIFO, or even HIFO, you’re locked into the algorithm’s choice. SPEC ID changes that.

Introducing SPEC ID

SPEC ID lets you choose exactly which lots to use for every disposal:

Same scenario with SPEC ID:

Select Lot C ($70,000 purchase):
  Proceeds: $95,000
  Cost Basis: $70,000
  Gain: $25,000 (only 33% of FIFO's gain!)

Or select Lot B for different tax treatment:
  Gain: $30,000 (short-term rates, but moderate gain)

Or mix lots for precise control:
  0.5 BTC from Lot A + 0.5 BTC from Lot C
  Blended approach for balanced outcomes

You decide. Every time.

Key Features

1. Visual Lot Selection

See all available lots at a glance:

Acquired	Quantity	Cost/Unit	Holding	Est. Gain
Jan 2023	1.0 BTC	$20,000	2 yrs	+$75,000
Mar 2024	1.0 BTC	$65,000	9 mo	+$30,000
Oct 2024	1.0 BTC	$70,000	2 mo	+$25,000

Select lots with checkboxes, enter partial quantities, and see your gain/loss update in real-time.

2. Quick Optimization Buttons

Don’t want to analyze every lot? Use our one-click strategies:

• Use FIFO - Safe, audit-friendly default
• Use LIFO - Defer gains in rising markets
• Use HIFO - Minimize gains automatically
• Maximize Gains - When you want to realize profits
• Maximize Losses - Strategic tax-loss harvesting

These buttons pre-select lots using the chosen strategy—then you can adjust as needed.

3. Real-Time Gain/Loss Preview

Before applying, see exactly what your selection means:

Selected: 1.5 BTC from 2 lots

Total Cost Basis:    $52,500
Expected Proceeds:   $142,500
Estimated Gain:      $90,000
  └── Long-term:     $60,000 (from Lot A)
  └── Short-term:    $30,000 (from Lot B)

Tax Impact: ~$23,400 (at combined 26% rate)

No surprises. Complete transparency before you commit.

4. Per-Wallet Compliance

Starting January 1, 2025, IRS Rev. Proc. 2024-28 requires per-wallet cost basis tracking. SPEC ID in Coincile automatically:

• Filters lots by source wallet/exchange
• Prevents cross-wallet matching (unless explicitly allowed)
• Maintains compliant audit trails
• Documents selections contemporaneously

5. Complete Audit Trail

Every SPEC ID selection is permanently recorded:

• Who selected the lots (user ID)
• When the selection was made (timestamp)
• Which specific lots were chosen (lot IDs)
• How much from each lot (quantities)

Perfect documentation for tax audits, external accountants, or compliance reviews.

Real-World Impact

Case Study: Year-End Tax Planning

A crypto fund needs to manage its tax liability before December 31:

Without SPEC ID:

• Limited control over which lots are sold
• Gains and losses happen as the algorithm dictates
• Difficult to achieve specific tax targets

With SPEC ID:

1. Review all open lots with cost basis
2. Calculate potential gain/loss for each
3. Select lots strategically to hit target tax outcome
4. Apply before year-end deadline
5. Document for auditors

Result: Reduced taxable gains by $2.3M through strategic lot selection.

Case Study: Long-Term Gains Optimization

An individual investor sells ETH for a major purchase:

Without SPEC ID (FIFO):

• Uses oldest lots (2021 purchase at $1,800)
• Current price: $3,500
• Gain: $1,700/ETH (long-term, but large gain)

With SPEC ID:

• Selects lots from January 2024 purchase at $2,300
• Current price: $3,500
• Gain: $1,200/ETH (41% less taxable gain)
• Still qualifies for long-term rates (held >1 year)

Result: Same tax rate, 41% lower taxable amount.

How to Use SPEC ID

Enable in Settings

1. Navigate to Organization Settings → Tax Lot Settings
2. Toggle Enable SPEC ID Mode to ON
3. Set your Fallback Method (see below)
4. Enable Per-Wallet Tracking for IRS compliance
5. Choose your Auto-Match Behavior

Configure Your Fallback Method

The fallback method handles disposals when you don’t manually apply SPEC ID:

Fallback	Best For	IRS Status
FIFO	Conservative, audit-safe	Explicitly allowed
LIFO	Defer gains in rising markets	Requires documentation
HIFO	Automatic optimization	Requires documentation

Our Recommendation: Set FIFO as your fallback for IRS compliance, then use SPEC ID’s quick optimization buttons (HIFO, Maximize Losses) on transactions where you want to optimize.

This gives you the best of both worlds:

• IRS-safe default for routine transactions
• Full optimization control where it matters

Apply to Transactions

1. Open any disposal transaction in the Ledger
2. Click “Apply SPEC ID” or find it in the transaction menu
3. Select lots from the modal (or use quick buttons)
4. Review the gain/loss preview
5. Click “Apply SPEC ID” to confirm

For Pending Transactions

If you’ve configured “Queue for review” mode:

1. Visit the SPEC ID Pending section
2. See all transactions awaiting lot selection
3. Process individually or use bulk actions
4. Fallback method applies automatically after your configured deadline

IRS Compliance: What You Need to Know

Rev. Proc. 2024-28 Requirements (Effective Jan 1, 2025)

The IRS now limits cryptocurrency cost basis methods to:

1. FIFO (First In, First Out)
2. Specific Identification (SPEC ID)

Other methods (LIFO, average cost for crypto) are no longer accepted for tax reporting.

SPEC ID Documentation Requirements

To use SPEC ID, you must:

1. Identify specific units at time of sale
2. Maintain adequate records
3. Track assets per wallet/exchange
4. Document contemporaneously

Coincile handles all of this automatically. Every SPEC ID selection creates the required audit trail with timestamps, user identification, and lot-level details.

Why SPEC ID Over HIFO?

We launched HIFO earlier—so why add SPEC ID?

Feature	HIFO	SPEC ID
Effort	Zero	Per-transaction
Control	Algorithmic	Complete
Best for	Set-and-forget optimization	Strategic tax planning
Use case	Most disposals	High-value or year-end transactions

Our recommendation: Use HIFO as your default method, then apply SPEC ID for specific high-value transactions where manual control matters.

Technical Specifications

API Support

SPEC ID is fully supported in our API for programmatic lot selection:

POST /api/v1/lots/process-disposal
{
  "transactionId": "tx_abc123",
  "assetId": "BTC",
  "quantity": "1.5",
  "proceeds": "142500.00",
  "method": "SPEC_ID",
  "specIdSelections": [
    { "lotId": "lot_001", "quantity": "1.0" },
    { "lotId": "lot_002", "quantity": "0.5" }
  ]
}

Supported Transaction Types

SPEC ID applies to all disposal transactions:

• Sales (crypto to fiat)
• Swaps (crypto to crypto)
• Withdrawals (off-platform transfers)
• Payments (goods/services purchases)
• Gifts (optional lot selection)

Wallet/Exchange Support

SPEC ID works with all integrated platforms:

• Centralized exchanges (Coinbase, Kraken, Binance, etc.)
• Self-custody wallets (MetaMask, Ledger, Trezor)
• DeFi protocols (Uniswap, Aave, Compound)
• Custom integrations via CSV or API

Getting Started

SPEC ID is available now in all Coincile plans:

1. Enable the feature in Organization Settings
2. Review your open lots in the Holdings tab
3. Apply SPEC ID to your next disposal transaction
4. Use quick buttons for common optimization strategies

For existing transactions that haven’t been synced, you can retroactively apply SPEC ID to optimize historical tax outcomes.

What’s Next

SPEC ID is just the beginning of our advanced tax optimization toolkit. Coming soon:

• Tax-Loss Harvesting Alerts - Notifications when lots become harvestable
• Wash Sale Detection - Automatic warnings for potential wash sales
• Estimated Tax Calculator - Project annual tax liability
• Multi-Year Planning - Optimize across tax years

Learn More

• SPEC ID Feature Documentation - Complete user guide
• Tax Lots Overview - How lot tracking works
• IRS Rev. Proc. 2024-28 - Regulatory requirements

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Ready to take control of your crypto tax outcomes? Start using SPEC ID today or book a demo to see it in action.