You can see the difference when FIFO and Specification Identification methods are applied to the transaction: Under FIFO, the cost basis is $3,000 and results in a $7,000 capital gain.

The LIFO reserve is the difference between the FIFO and LIFO cost of inventory for accounting purposes.

You can save money on crypto taxes by properly using tax advantageous tax lot ID methods (Specific ID, HIFO, FIFO & LIFO).

FIFO or Specific Identification: Choosing the Best Way to Calculate Cost Basis on Crypto For crypto users who use multiple exchanges or wallets, understanding how the IRS treats cost basis ...