Lot-Matching Methods

The Tax Optimizer lets you manage your trades' gains and losses for tax purposes by changing a tax lot's matching method. The system default is First In, First Out (FIFO). Choose from the following tax lot matching methods in Tax Optimizer:

First In, First Out (FIFO)

The default method for matching tax lots. Sales are paired with the earliest purchases sequentially. FIFO assumes that assets remaining in inventory are matched to the most recently purchased or produced assets. FIFO is always used for futures, options on futures and cryptocurrencies.

Last In, First Out (LIFO)

Each sale is paired with the most recent possible purchase. LIFO assumes that an entity sells, uses or disposes of its newest inventory first.

Highest Cost

Seeks to maximize losses while minimizing gains. This method first looks at all possible ways to match a closing trade to an open lot. Sales are paired based on the following rules:

  1. It looks at all possible options for matching a closing trade to an open lot.
  2. If any possible matches would result in a loss, the method chooses the match that results in the largest possible loss.
  3. If no possible match would result in a loss, the method chooses the match that results in the smallest possible gain.

Maximize Long Term Gain (MLG)

  1. Maximize Long-Term gain per share

  2. If no Long Term gain, maximize Short Term gain per share

  3. If no Long Term or Short Term gain, realize and minimize Short Term loss per share

  4. If no Short Term loss, realize and minimize Long Term loss per share

Maximize Long Term Loss (MLL)

  1. Maximize Long-Term loss per share

  2. If no Long Term loss, maximize Short Term loss per share

  3. If no Long Term or Short Term loss, realize and minimize Short Term gain per share

  4. If no Short Term gain, realize and minimize Long Term gain per share

Maximize Short Term Gain (MSG)

  1. Maximize Short-Term gain per share

  2. If no Short Term gain, maximize Long Term gain per share

  3. If no Short Term or Long Term gain, realize and minimize Long Term loss per share

  4. If no Long Term loss, realize and minimize Short Term loss per share

Maximize Short Term Loss (MSL)

  1. Maximize Short-Term Loss per share

  2. If no Short Term loss, maximize Long Term loss per share

  3. If no Short Term or Long Term loss, realize and minimize Long Term gain per share

  4. If no Long Term gain, realize and minimize Short Term gain per share

Specific Lot

Lets you see all of your tax lots and closing trades, then manually match lots to trades. The Specific Lot method is available in Method for All and per transaction, but it cannot be set as the Default Match Method.