A Tax Lot is the recorded details of a security acquisition. Each acquisition on different dates or with different prices represents a new tax lot. Tax lots show cost basis information for positions. By Tax Lot Matching investors can specify which specific shares of a stock or mutual fund are sold, in contrast to the IRS default of first-in, first-out (FIFO).
Huge tax savings can be achieved via Tax Lot Matching when shares are flat, show a loss or have little gain are sold instead of shares from long-term investments that show substantial gains. You can choose tax lots to maximize tax advantages by contributing specific securities with the most unrealized long-term capital gains. This is allowable for all assets except cash core and money market.
Take full advantage of these tax laws by using tax lots to manage your investment purchases and sales, and reporting that income to the Internal Revenue Service (IRS).Working with your tax strategist, you can decide which is the best way for you to identify the cost basis of the shares you want to sell:
- FIFO (first-in, first-out)
- The average-cost method
- The specific-share method
With individual stocks and bonds, you can use:
- FIFO
- LIFO (last in, first out)
We welcome you to further explore this strategy with a take advantage of a free discovery session by visiting New Client Application or https://calendly.com/d/27b-bgh-x9g.
