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According to this interview, taxation holding periods in the United States for cryptocurrency can be determined by FIFO (First In First Out), LIFO (Last In First Out), or a more flexible option called Versus Purchase or Specified Asset, which allows the owner to declare which specific coins they wish to be considered to have spent.

My question is, do these holding period algorithms have to correspond to the actual UTXOs being spent on the blockchain? Does using FIFO entail that you have to program your wallet to spend older UTXOs before newer ones, and vice-versa for LIFO? Does Specified Asset require the owner to actually keep track of which UTXOs their wallet is spending? These details are otherwise at a level of technical understanding far deeper than what a regular user would need to operate a wallet, and the UTXO choices wallets make are typically chaotic. Are these details essential to holding period algorithms, or can spent coins specified for tax purposes diverge from spent UTXOs in the blockchain history?

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