One sale, two tax results
Here is an illustration with round numbers. You bought 1 ETH for $1,800 and later another 1 ETH for $3,200, and now you sell one of them for $2,500. Treated as oldest first, the sale shows a $700 gain. Name the $3,200 unit instead and the same sale shows a $700 loss.
The IRS virtual currency FAQ allows that choice if you can specifically identify the units and back up your cost basis in them, with records of the date and time each unit was bought, what it cost and what it was worth then. It wants the same details for the sale. Without that, the FAQ says, units count as sold first in, first out.
The 2026 relief and what changes in 2027
Since January 1, 2025, Treasury regulation section 1.1012-1(j) has set the order in which units in the same wallet or account count as sold. For coins held at a broker, it lets you choose units by telling the broker no later than the date and time of the sale.
Brokers were not ready to take those instructions. IRS Notice 2026-20 says many custodial brokers “are not currently ready to accept specific identifications (other than standing orders)”, and it extends relief first given in Notice 2025-7 through December 31, 2026.
Until then you may record the units you are selling, or a standing order, in your own books and records by the time of the sale. The relief does not cover coins you keep outside a broker. Expect a mismatch on paper. The notice itself warns that the acquisition dates and basis a broker reports on a 2026 Form 1099-DA may differ from what your own books say.
What happens on January 1, 2027? The relief stops, and the notice is explicit that it can’t be used for sales made after the relief period ends.
That leaves the regulation’s rule, under which you identify units to the broker by the time of the sale, using an identifier the broker accepts or a standing order you give it. If a broker offers only one method, such as highest cost first, the regulation treats that as your standing order.
How the UK does it instead
UK investors have no lot to pick. HMRC’s Cryptoassets Manual puts each type of token into its own “section 104 pool” with a single pooled cost, so someone holding bitcoin and ether has two pools. A sale is matched first to tokens of the same type bought that day, then to any bought in the 30 days after it, and only the rest comes out of the pool at its average cost.
| Rule | United States, coins at a broker | United Kingdom |
|---|---|---|
| Which cost is used | Whichever units you name (oldest first otherwise) | Tokens bought that day, next any bought within 30 days after, last the pool’s average |
| Legal reference | Treas. Reg. 1.1012-1(j), with IRS Notice 2026-20 | TCGA 1992 s104 (pool), s105 (same day), s106A (30 days) |
In Britain the same 30-day matching handles wash sales. Buy back within a month of selling and HMRC matches the sale to the new purchase rather than to the pool.
None of this is tax advice. Planning a sale early in 2027? Ask your broker now which identifiers it accepts, and whether you can leave a standing order with it.