Tax Lot

A tax lot is a record of a specific quantity of an asset acquired at a single time and price, used to calculate capital gains or losses when part of a holding is sold. An investor who bought 1 BTC at $20,000 and another at $60,000 holds two lots, and which lot is deemed sold determines the taxable gain.

Why it matters

Lot selection is one of the few tax levers an investor controls after the fact. Selling the high-cost lot first (specific identification, often implemented as highest-in-first-out) minimizes current gains, while first-in-first-out, the common default, tends to realize the largest gains on long-held assets. The IRS has treated cryptocurrency as property since Notice 2014-21, so every sale, swap, or purchase made with bitcoin is a lot-level taxable event, and beginning in 2025 US rules require cost basis to be tracked wallet by wallet rather than across all accounts as one pool. Holding periods matter too, since lots held over a year qualify for long-term rates.

In the gold vs bitcoin debate

Tax treatment quietly tilts the comparison in the United States. Physical gold and most gold ETFs are taxed as collectibles, with long-term gains capped at a 28% rate, while bitcoin gains fall under standard long-term capital gains rates of 0%, 15%, or 20% for most taxpayers. Bitcoin's precise digital records also make lot tracking mechanical, whereas decades-old coin collections often have undocumented bases. Investors comparing the assets on after-tax returns need different arithmetic for each.