Tax Lot

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Tax lots define the date, transaction size, and cost basis of a purchase or sale of an asset. Multiple purchases of the same asset generate distinct tax lots, and each tax lot has its own cost basis.

There are multiple methods for identifying tax lots and the most advantageous time to sell or otherwise transact and specific tax lot. Identification methods include first-in-first-out (FIFO), last-in-first-out (LIFO), average cost, and specific lot, and many more. The documentation of all tax lots is known as tax lot accounting.