US tax- accounting method

[Joe200]

OK, now that we've established what BTC is for tax purposes, what type of accounting do you use?

First-in First-Out, Average Cost, Specific Identification (Last-In-First-Out, Highest-Cost-First-Out, Closest-Cost-First-Out), or something else?

- Which is legal to use?
- If more than one is legal, which is better?

[Keyser Soze]

Generally the IRS assumes first in first out, but there are unique cases where average cost is used instead(mutual funds, for example). If you wish to use a method other than FIFO, consult a tax professional.