TaxBit also is able to provide the complete records necessary to support your use of Specific Identification. TaxBit automates the process by specifically identifying, by exchange, the assets with the highest cost basis for disposition to reduce taxable gains. TaxBit provides support for Specific Identification on a per account or wallet basis in order to legally minimize users' taxes and reconcile to any Forms 1099 issued by exchanges.
Specific Identification shouldn’t be used when universally pooling assets. Second, the IRS guidance requires that Specific Identification be done on a per account and per wallet basis. In simpler terms, the IRS requires a complete set of transaction records when a taxpayer wants to use Specific Identification.
The IRS, however, has imposed requirements upon taxpayers that want to use Specific Identification.įirst, a taxpayer must, “show (1) the date and time each unit was acquired, (2) your basis and the fair market value of each unit at the time it was acquired, (3) the date and time each unit was sold, exchanged, or otherwise disposed of, and (4) the fair market value of each unit when sold, exchanged, or disposed of, and the amount of money or the value of property received for each unit.” What are the requirements for Specific Identification?
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