How to reduce your crypto capital gains by 50%

Not a clickbait title. I've imported my trades in Contracking.info (so they all have transaction IDs) and I've toggled "Group all purchases by day" and "Use Depot separation (tax lots)". The difference between one combination and another was 20% in short-term capital gains. Not bad. We're not even going into FIFO vs. LIFO.

Then I switched from FIFO to LIFO (which is legal since the 2019 guidance, more specifically Q38 & Q39 in this IRS FAQ), for a further reduction of another 30%.

The best combo has been HPFO with "Group all purchases by day". The difference between that and the worst method (LAFO) is 9.5x. As in, financially ruined, vs. actually able to pay.

UPDATE1: At the end of August, Cointracking introduced an "optimized" price calculation method ("OPTI"). It reduces my gains for some years, and increases them in others in which I only had losses. May be worth using it if,

• you only have losses, because asking for a refund invites an audit
• you exceed the $3000 capital loss limit that can be carried forward (and you haven't filed for MTM accounting)

From the CryptoTrader.tax link above,

It’s important to note that the IRS likes to be retroactive when it issues guidance. For instance, Notice 2019-24, which was the most recent guidance released that provided clarity to this specific identification question, was issued in 2019, but still can be applied to transactions that took place before 2019. This means that certain taxpayers who used FIFO in previous years may be able to reasonably go back and amend previous years tax returns using a different, specific identification costing method.

From the IRS FAQ, A39:

You may identify a specific unit of virtual currency either by documenting the specific unit’s unique digital identifier such as a private key, public key, and address, or by records showing the transaction information for all units of a specific virtual currency, such as Bitcoin, held in a single account, wallet, or address.

UPDATE2: I've written a separate post comparing different crypto tax accounting methods after I finished entering all my 14,000+ transactions. HPFO won.

UPDATE3: I've tested HPFO in Cointracking.info vs. HPFO in Bitcoin.tax. Cointracking won by about 10%. I guess this might be due to the "group by day" feature. BUT, Bitcoin.tax won by a landslide overall, because it allows selecting different accounting methods per asset (e.g. HPFO for BTC and AVCO for ETH). This has saved me thousands of dollars compared to Cointracking.info.

TL;DR:

• I've compared Cointracking.info, Bitcoin.tax, Cointracker.io and ZenLedger.io
• if you've paid a lot, it may very well be worth amending past returns
• Bitcoin.tax may look bland and be a little cumbersome to use, but it saved me 20% in tax for 2017 vs. Cointracking.info, and even more for the 2018 losses
• Cointracking.info does have the fastest and most ergonomic transaction entry interface

QUESTIONS:

1. Is all of this right, or am I missing something? 'Cuz it does sound like a bit of a joke that just by toggling some settings in Cointracking, e.g. "Group by day", you can literally end up (not) having to pay tens of thousands of dollars.

2. Where on your tax return do you report the accounting method used, or how you've identified the trades?