Tax lot
Lot · Share lotA tax lot is a batch of shares bought at one time and one price, tracked on its own for cost basis and holding period. A holding is the sum of its lots, and a sale is taxed lot by lot: the gain or loss and its term come from the lot the shares are sold from.
What is a tax lot?
A brokerage records a purchase as a lot: the date, the number of shares and the price paid per share. Two purchases of the same fund are two lots, even in the same account. The holding shown on a statement is their total, but the tax record underneath is the list.
A lot carries two facts a total cannot. Its cost per share is the basis of those shares, and its purchase date starts their holding period, so the same holding can have one lot with a gain and another with a loss, or one lot that is long-term while a newer one is short-term.
When part of a holding is sold, the broker's default takes the oldest lots first unless specific lots are identified at the sale. The IRS allows either, and the choice sets which basis and which date the sale is measured against. Mutual fund shares may instead use an average cost across the lots, which gives up the per-lot figures.
How a tax lot works, with numbers
One index fund was bought three times: 50 shares at $180 two and a half years ago, 50 shares at $230 ten months ago and 25 shares at $255 six weeks ago. Today the fund trades at $240.
The first lot cost $9,000 and is worth $12,000, a $3,000 gain, long-term. The second cost $11,500 and is worth $12,000, a $500 gain, short-term. The third cost $6,375 and is worth $6,000, a $375 loss, short-term. The holding as a whole shows 125 shares, a $26,875 basis and a $3,125 gain; that one figure is the three lots added up, and a sale of 25 shares reads three different ways depending on which lot it comes from.
- Lot 1, 50 sh × ($240 − $180), LT
- + $3,000
- Lot 2, 50 sh × ($240 − $230), ST
- + $500
- Lot 3, 25 sh × ($240 − $255), ST
- − $375
- Holding, 125 sh, basis $26,875
- + $3,125
Why a tax lot matters
A holding's total gain averages away what a sale is taxed on. In the example, the holding is up $3,125, and one of its lots is under water; a sale from that lot realizes a loss while the holding as a whole is still up.
The term is a per-lot fact too. Three lots of one fund can be long-term, short-term and short-term at once, and which lot a sale comes from sets both the amount and the term of the gain.
A lot with no recorded purchase has no basis and no date, so the shares in it have no gain figure and no term until the purchase is found.
Tax lot in Taiga Finance
In Taiga Finance a holding's drawer in Investments has a “Lots” table, headed with the count of acquisitions, with a row per lot: “Acquired”, “Shares”, “Value”, “Gain $” and “Term”. The value is the lot's shares at the holding's current price, market value divided by shares; Gain $ is that value minus the shares times the lot's cost per share, signed; Term reads “LT” once the lot has been held more than a year and “ST” before that. Above it, the “Cost basis” worksheet lists each lot as its date, shares and cost per share, and the holding's basis is the sum. The rows sort by Acquired, oldest first.
Lots come from the purchase history in an uploaded OFX or QFX statement; a brokerage sync writes none. A holding entered by hand carries at most one lot, its cost basis and acquisition date, and the basis is editable there. When a synced position holds more shares than the statement history accounts for, the drawer adds a lot whose Acquired reads “Unknown”, Gain “—” and Term “?”, and the worksheet's caveat counts them: “shares with unknown cost — not in the basis or its gain.”
A lot with an unrealized loss shows as a negative Gain $ on its row. The drawer lists no such lots separately, and the ledger rows outside the drawer carry no per-lot or per-holding gain.
Accounts & balances →Key takeaways: Tax lot
- A tax lot is a batch of shares bought at one time and one price; a holding is the sum of its lots.
- A lot has its own basis and its own purchase date, so the gain or loss and the term of a sale come from the lot sold, not from the holding's average.
- A holding with a gain can hold a lot with a loss, and a sale from that lot realizes the loss.
- Taiga Finance lists a holding's lots with each one's acquisition date, shares, value, signed Gain $ and LT or ST term, and marks shares with no recorded purchase as unknown cost.
Questions about Tax lot
What is a tax lot?
A batch of shares bought at one time and one price, kept as its own record with its cost per share and purchase date. A holding built from three purchases has three lots, and a sale is taxed on the basis and holding period of the lot the shares come from.
Why does a holding with a gain have lots with a loss?
Because each lot is measured from its own price. A fund bought at $180, $230 and $255 and priced at $240 today is up as a whole, and the $255 lot is under water on its own. The holding's gain is the sum of the three.
Does Taiga Finance show tax lots?
Yes. A holding's drawer in Investments has a Lots table with each lot's acquisition date, shares, value, signed gain and LT or ST term, and a cost basis worksheet that adds the lots up. Shares a statement history does not account for show as a lot with unknown cost, left out of the basis and its gain.