Tax Lot
Definition
A record of a specific purchase of shares or units, including the date, quantity, and price paid, used to calculate gain or loss when those units are sold.
A tax lot represents a single purchase of an investment — a specific number of shares or units bought at a specific price on a specific date. Every time you buy shares of a stock, crypto, or other asset, you create a new tax lot. When you sell, your gain or loss depends on which lot(s) you're selling.
Understanding tax lots is essential because the same investment can have drastically different tax implications depending on which lot is sold. If you bought Bitcoin at $20,000 in one lot and $60,000 in another, selling at $50,000 produces either a $30,000 gain or a $10,000 loss — same asset, very different tax outcomes.
Tax lots track four key pieces of information: acquisition date, quantity, cost basis per unit, and holding period. The acquisition date determines whether a gain is short-term or long-term. The cost basis determines the size of the gain or loss. Together, these control your tax bill.
Brokerages maintain tax lot records for securities, but accuracy can be lost during transfers between brokers. For crypto, lot tracking is more complex because tokens are fungible and most exchanges don't maintain lot-level records across deposits and withdrawals.
Proper tax lot management is one of the most effective ways to control your investment tax bill. By understanding which lots you own and their respective cost bases, you can make informed decisions about which to sell for the best tax outcome.
Where this appears in Clarity
Clarity automatically tracks and calculates these concepts across your connected accounts.
Related Terms
Frequently Asked Questions
How many tax lots can I have for one stock?
There's no limit. Every purchase creates a new lot, including reinvested dividends. An investor who has been buying monthly for five years could have 60+ tax lots for a single stock. This is why automated lot tracking is so important.
What happens to tax lots when I transfer to a new broker?
Your lots should transfer via the ACATS system, but cost basis and acquisition dates may not always transfer correctly. Always verify your lot information after a transfer, and keep records of your original purchases as backup.