Tax Lot Accounting

DEFINITION of 'Tax Lot Accounting'

A record keeping technique that traces the dates of purchase and sale, cost basis, and transaction size for each security in your portfolio, even if you make more than one trade in the same security.

BREAKING DOWN 'Tax Lot Accounting'

The goal is to minimize the net present value of your current taxes by deferring the realization of capital gains and recognizing losses sooner.