Specific Identification
A cost-basis accounting method that lets a taxpayer choose exactly which specific units of an asset were sold, rather than following a fixed order.
Specific identification is a cost-basis accounting method that lets a taxpayer choose exactly which specific units of an asset — identified by their individual purchase date and price — were sold in a given transaction, rather than being forced to follow a fixed order like FIFO, LIFO, or HIFO.
Where a jurisdiction permits it, specific identification generally requires maintaining detailed records capable of identifying the specific units involved in each disposal, in exchange for the flexibility to choose which units to sell for tax purposes. See Kaavon's "Crypto Cost Basis and Accounting Methods" guide for how this compares to the other available methods.
Examples
- A taxpayer using specific identification might deliberately choose to sell units acquired at a higher cost basis, to minimize a reported capital gain.
- Specific identification generally requires more detailed recordkeeping than a simpler, fixed-order method like FIFO.