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. Position Sizing

    The dollar value being invested into a particular security by ...
  6. Transaction Costs

    Expenses incurred when buying or selling securities. Transaction ...
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RELATED FAQS
  1. Do I have to pay capital gains?

    I am a 72 year old retired widow. I want to sell my home and purchase a condo at the same value.  ... Read Answer >>
  2. How long do I need to keep income tax records?

  3. How do I calculate the capital gains tax on the sale of my house?

    I'm thinking of selling my first house, but I just learned that I might have to pay capital gains taxes. I wanted to use ... Read Answer >>
  4. 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 >>
  5. 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 >>
  6. 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 >>
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