Cost Basis Methods Standard Terms and Conditions

Please consult a tax advisor to determine the methods that best suit your personal tax situation. River Financial Inc. does not provide any tax advice and is not responsible for any tax consequences of the cost basis methods you choose or of changing them. The information provided is not intended to be a substitute for specific or individualized tax, legal, or investment planning advice. Please consult with your tax advisor, CPA, investment manager, and/or financial planner before changing either cost basis method.

By changing a cost basis method, you certify that you intend to change that cost basis method for this account. Your account has two cost basis methods: a sell method and a send method. Changing one does not change the other. You may set each method to First In, First Out (FIFO), Last In, First Out (LIFO), Highest In, First Out (HIFO), or Lowest Cost, First Out (LOFO). If you have not selected a method, River uses First In, First Out (FIFO) for sells and Last In, First Out (LIFO) for sends. If you selected a method before sells and sends had separate methods, your send method was set to the reverse of it (FIFO to LIFO, LIFO to FIFO, HIFO to LOFO), so your sends continue to use the same order as before.

You accept that the sell method you set for an account will determine which tax lots are used for, and the gains and losses of, all future sells on that account. You accept that the send method you set for an account will determine which tax lots are used for all future sends from that account, including on-chain and Lightning sends, River Link claims, transfers to other River accounts, network fees paid in bitcoin, and any other transfer of bitcoin out of your account that is not a sell and is not described below. Each method applies unless and until you change it. You accept that your sell method will also be used for IRS reporting of your sales as required. Your send method determines which tax lots leave your account, which affects the tax lots available for, and the cost basis of, your future sales. If a send is a taxable disposition for you, such as a payment to another person, your send method also determines your gain or loss on that send.

You accept that for sells, River will use tax lots with a known cost basis first, then tax lots with a zero cost basis, then tax lots with an unknown cost basis. For sends, River will use tax lots with an unknown cost basis first, then tax lots with a zero cost basis, then tax lots with a known cost basis. A tax lot has a known cost basis if River has a record of its cost, including bitcoin you bought on River, bitcoin River paid to you as interest or rewards, and deposited or received bitcoin that you added the cost basis for. A tax lot has a zero cost basis if River’s record shows a cost of $0. A tax lot has an unknown cost basis if River has no record of its cost, such as bitcoin you deposited from outside River and did not add the cost basis for. If you enter a cost basis for bitcoin you deposited or received, River uses it to order your tax lots and to calculate gains and losses shown in your account. River does not verify a cost basis you enter and does not report it to the IRS as cost basis determined by River. Within each group, River orders tax lots according to the method you selected for that flow. If your method does not distinguish between two tax lots, such as HIFO or LOFO among tax lots with the same or an unknown cost basis, River uses the older tax lot first for sells and the newer tax lot first for sends. For bitcoin deposited from outside River where you do not provide a lot acquisition date, River treats the date it first saw the incoming transaction to your account as its acquisition date.

Some transactions use specific tax lots or a fixed method instead of your selected method. Cash-Funded Sends, as defined in the Terms of Service, including River Links funded by a purchase, use the bitcoin bought for that transaction. For such a River Link, the purchased bitcoin leaves your account when the link is claimed, which may be in a later tax year. If a send to an address or invoice fails, or the River Link is cancelled or expires, the purchased bitcoin stays in your account and your selected cost basis methods apply to it. Auto Convert uses the bitcoin from the deposit that triggered it, and applies your sell method only if that bitcoin can no longer cover the full sale. If an ACH payment you used to buy bitcoin is returned, River will recover the amount owed. Where the payment funded one completed purchase and River can reverse that purchase in full, River may reverse it by removing the bitcoin bought. Otherwise, River recovers the amount owed from your USD balance first and recovers bitcoin only for any shortfall, valued at River's mid-market price at the time of recovery. Any bitcoin River recovers comes first from the bitcoin bought with that payment, starting with the most recent purchase. If that bitcoin is not enough or is no longer in your account, River applies LIFO to the rest, starting with bitcoin with an unknown cost basis, then bitcoin with a zero cost basis, then bitcoin with a known cost basis. If River removes bitcoin from your account for any other reason permitted by the Terms of Service, including recoveries and beneficiary plan payouts, River applies LIFO, starting with bitcoin with an unknown cost basis, then bitcoin with a zero cost basis, then bitcoin with a known cost basis.

You agree that a change in either cost basis method is only prospective and will only apply to transactions that have not been completed, subject to any limits imposed by the IRS, and that you are unable to change the cost basis for past transactions. If you change a method while reviewing a sell or send, the change applies to that transaction and to all future transactions of the same type on the account. A change to your sell method also applies to any target-price sell order that has not yet executed. A change to your send method also applies to any River Link funded from your bitcoin balance that has not yet been claimed. If a River Link expires or is cancelled before it is claimed, no tax lots leave your account. A method change does not apply to a send you have already submitted, which keeps the tax lots selected when you submitted it.

You understand that profits, losses, and tax consequences may differ based on the cost basis method chosen. By clicking “Change method,” you confirm that you have read this disclaimer and instructions.