Specific identification is an IRS-permitted inventory method where the cost of goods sold is the actual purchase cost of the exact item sold, tracked individually — not an average or a first-in-first-out formula. Each item carries its own cost basis from the moment you acquire it until the moment it sells.
It is the natural fit for one-of-a-kind sellers — vintage, antiques, art, salvage — because there is nothing to average: every piece is unique, bought at its own price, and sold for its own price. Formula-based methods assume interchangeable units, which one-of-a-kind inventory simply is not.
The method demands per-item record-keeping, which is exactly what item-level inventory tracking provides: a distinct record, cost, and history for every piece, so that when one sells, its specific basis flows into COGS without guesswork.
Related terms
Cost Basis
The total amount invested to acquire an item — purchase price plus associated costs — used to calculate profit and cost of goods sold when it sells.
COGS (Cost of Goods Sold)
The total cost of materials, labor, and overhead directly tied to producing the goods you sell. Tracked automatically through purchases, recipes, and production runs.
Deadstock
Inventory that is not selling and ties up cash without turning over — old materials or finished goods that have stalled on the shelf.
Comps (Comparables)
Recent sale prices of comparable items, used to estimate what a one-of-a-kind or vintage piece is worth before buying or listing it.