I use Coinbase for all of my BTC purchases, and starting this year made a few (small number) of sales, and so obviously need to figure out how to report the sales. Overall I am well familiar with capital gains taxes. I understand people here can not offer "legal advise", but figure many people here are also dealing with this issue so it would be nice to have a discussion.

The IRS plans to use the FIFO method, and it seems the Coinbase "Cost Basis for Taxes" uses this FIFO method for calculating coin basis for both sales and transfers to your own wallet.

In my scenario I typically purchase coins, then transfer all of them to my own wallet at xxx address, then purchase more coins and transfer those to my own wallet at yyy address, and so on. Sometimes I've left coins on coinbase and then sold them a little bit later, and sometimes I transferred coins from a specific address back to coinbase and sold them.

1) I'd assume it is safest to use the coinbase calculated basis for both sales and transfers to external wallets.
-> This means that when I transfer coins to xxx wallet address, the basis of those coins is now what coinbase determined them to be.

2) The tricky part comes when I transferred coins back to coinbase to sell.
- For example, in the above example lets say I had coins at xxx address at basis xBasis, and coins at yyy address at basis yBasis. Using the FIFO a sale should match to your latest buy, i.e. the yyy address coins. But in my case I transferred coins from xxx address to coinbase, so it seems the "correct" thing to do is use xBasis.

Basically by transferred coins out of Coinbase to specific addresses, I can control and verify to the IRS which coins I later transferred back and sold.

What do you guys think, is this right?