HIFO vs FIFO for US taxes

[gamble.on.it]

I did my 2020 taxes with FIFO for the cost basis. I was messing around with HIFO and I get drastically better numbers with HIFO. Can I change FIFO to HIFO for my 2022 taxes? And what about the changes for my 2020 taxes?

[mikatachan]

I’m not a tax professional, and you should definitely ask one before you do anything.

That being said, everything I’ve found online says there’s no clear answer in the US. Most places recommend FIFO. Professor Google though doesn’t say you can’t use HIFO, as long as you stay consistent (I personally did this). If you filed 2020 as FIFO, and want to file 2021 (I’m assuming?) as HIFO, you’d need to file an amendment to your 2020 returns, re-calculating everything as HIFO, then file 2021 as HIFO. Again, double check with your CPA, and watch out for updated advice from the IRS.

[Brent_Maier]

I have the same question in that I had a very bad investment on a HODL coin where I previously had a nice pool at a great price. I want to dump the high cost buy and buy lower on this next token unlock. From a tax perspective, dumping those would allow me to drop the coins I bought high and lower my overall average cost by quite a bit.

If I choose to HIFO this year and sell those 2 lots of high dollar buys, it will show up as a loss in my 2022 filing. If for 2023 I want to switch back to FIFO, will Koinly keep track of the previous years findings and flag the token amounts reported on the HIFO filing so the next years filing of FIFO excludes those from the calculation going forward?

I hope this make sense but as it stands HIFO looks like my best option considering early crypto buys seem to be in my opinion better than future buys.

Any further clarification here would be appreciated. I came here to post this exact question and it was already pinned at the top.

Thanks!