The tax lot method is an essential aspect of investment accounting, particularly for those with complex and diverse portfolios. By providing a detailed record of each security acquisition and sale, investors gain valuable insights into their cost basis, capital gains, and tax liabilities.
Investing in the stock market can be a complex task, and managing your investments can be even more challenging. One aspect of investing that can be confusing is how to calculate capital gains and losses. The tax lot method is a popular way of calculating these gains and losses. In this comprehensive guide, we will explore what the tax lot method is, how it works, and why it is essential for investors.