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.

RELATED TERMS
  1. Transaction Date

    The date upon which a security or other financial instrument ...
  2. Cost Basis

    1. The original value of an asset for tax purposes (usually the ...
  3. Trade Date Accounting

    A method company accountants and bookkeepers use to record transactions ...
  4. Fictitious Trade

    1) A trade that is booked with an execution date far in the future, ...
  5. Transaction

    1. An agreement between a buyer and a seller to exchange goods, ...
  6. Transaction Costs

    Expenses incurred when buying or selling securities. Transaction ...
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RELATED FAQS
  1. How Long Should I Keep My Tax Records?

    Having the right information available when the IRS calls can save you considerable time, money and stress. Learn how long ... Read Answer >>
  2. How do I calculate my gains and/or losses when I sell a stock?

    To begin, you need to know your cost basis, or the price you paid for the stock. If you did not record this information, ... Read Answer >>
  3. How do I figure out my cost basis on a stock investment?

    The cost basis of any investment is the original value of an asset adjusted for stock splits, dividends and capital distributions. ... Read Answer >>
  4. How do you calculate the cost basis for a mutual fund over an extended time period?

    Investors must pay taxes on any investment gains they realize. Subsequently, any capital gain realized by an investor over ... Read Answer >>
  5. How do I avoid paying excess taxes on securities I have sold?

    If you dispose of securities during the tax year, the profit or losses from the transaction are either capital gains or losses. ... Read Answer >>
  6. Why should I keep records on my tax-exempt bond transactions?

    Keep your purchase records on all investments, including tax-exempt bonds. Though the interest is tax-free, you may owe taxes ... Read Answer >>
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