Tax Lot
A record of a specific purchase—the date, quantity, and price you paid. When you sell, which lot you're selling from determines your gain or loss.
Every time you buy shares of a stock or units of crypto, you create a tax lot—a record of that specific purchase with its date, quantity, and price. When you sell later, your tax bill depends on which lot you're selling from.
This matters more than most people realize. Say you bought Bitcoin twice—once at $20,000 and again at $60,000. If you sell at $50,000, you either have a $30,000 gain or a $10,000 loss depending on which lot you sell. Same asset, same sale price, wildly different tax outcome.
Each lot tracks four things: when you bought it, how many units, what you paid per unit, and how long you've held it. The date determines short-term vs long-term. The price determines the size of your gain or loss. Together, they control what you owe.
Brokerages keep lot records for stocks, but accuracy can slip during transfers between brokers. For crypto, it's trickier—tokens are interchangeable, and most exchanges don't maintain lot-level records when you deposit or withdraw.
Getting a handle on your tax lots is one of the best ways to manage your investment tax bill. When you know which lots you own and what you paid for each, you can make smarter decisions about which ones to sell.
Frequently Asked Questions
▸How many tax lots can I have for one stock?
No limit. Every purchase creates a new lot—including reinvested dividends. If you've been buying monthly for five years, you could easily have 60+ lots for a single stock. This is exactly why automated lot tracking is so helpful.
▸What happens to tax lots when I transfer to a new broker?
Your lots should transfer through the ACATS system, but cost basis and dates don't always come through correctly. Always double-check your lot info after a transfer, and keep your own records as a backup.
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