Tax Lot Preferences

What is tax lot reporting methodology, and why is it important?

Tax lot reporting methodology is a system used to track and report the cost basis and capital gains or losses of securities for tax purposes. When you sell securities such as stocks or bonds, you need to determine the specific tax lots being sold to accurately calculate the taxable gain or loss. Common methodologies for tax lot reporting include First-In-First-Out (“FIFO”), Last-In-First-Out (“LIFO”), Highest-In-First-Out (“HIFO”), and more.

What is Webull’s default tax lot reporting method?

Webull uses FIFO as the default tax lot reporting method.

What other tax lot reporting methods can I choose from at Webull?

In addition to FIFO, you can choose from LIFO (Last-In-First-Out), HIFO (Highest-In-First-Out), LOFO (Lowest Cost, First Out), and MinTax (Minimum Tax).

How does First-In-First-Out (FIFO) work?

First In, First Out is designed to sell the lot of securities you bought first. This preference can be employed for various reasons, such as reducing tax liability or adjusting gains. An example:

• Buy 100 shares @ $50 on 1/02/2021
• Buy 50 shares @$45 on 1/31/2021
• Sell 50 shares @ $47

The 50 shares sold are the first 50 shares purchased @ $50 on 1/02/2021.

How does Last-In-First-Out (LIFO) work?

Last In, First Out is designed to sell the lot of securities purchased most recently. This methodology can be used for multiple reasons including to reduce tax liability or to minimize or maximize gain depending on what the security was purchased for last. An example:

• Buy 100 shares @ $50.00 on 1/02/2021
• Buy 50 shares @ $100 on 1/31/2021
• Sell 50 shares @ $47

The shares most recently purchased for $100 on 1/31/2021 will be used.

How does Highest-In-First-Out (HIFO) work?

Highest In, First Out is designed to minimize taxes by selling the shares with the highest price per share first. However, this methodology does not consider the long-term vs short-term treatment and will act purely based on which lot has the highest price per share. An example of HIFO being deployed:

• Buy 100 shares @ $50.00 on 1/02/2021
• Buy 100 shares @ $125 on 1/09/2021
• Buy 50 shares @ $100 on 1/31/2021
• Sell 50 shares @ $47

The shares purchased for $125 on 1/09/24 would be used as they were purchased at the highest cost.

How does Lowest Cost, First Out (LOFO) work?

The Lowest Cost, First Out is designed to maximize investors gain when selling a security. It will sell securities based on the lowest cost paid until that lot is exhausted and will then move up the ladder in terms of price per share. Below is an example of LOFO:

• Buy 100 shares @ $50.00 on 1/02/2021
• Buy 50 shares @ $45 on 1/03/2021
• Buy 100 shares @ $125 on 1/09/2021
• Buy 50 shares @ $100 on 1/31/2021
• Sell 50 shares @ $47

The shares purchased for $45 on 1/03/2021 would be used as they were purchased at the lowest cost.

How does Minimum Tax (MinTax) work?

The MinTax cost basis method is designed to lower an individual's tax burden for the current transaction by identifying securities to sell based on the most favorable tax rate. An example of MinTax is below:

• Buy 100 shares @ $50.00 on 1/13/2019
• Buy 100 shares @ $50.00 on 1/02/2021
• Buy 50 shares @ $45 on 1/03/2021
• Buy 50 shares @ $47 on 1/31/2021
• Sell 50 shares @ $65

The shares purchased for $50 on 1/13/2019 would be used because they were purchased at the lowest cost and held the longest, considering short-term versus long-term capital gains.

What should I know before changing my tax lot reporting method at Webull?

Modifying the tax lot reporting method only affects the profit/loss reported on the 1099 tax form. The Webull app will still display profit/loss based on the average purchase price. Changes to the reporting method apply only to future transactions and cannot be retroactively applied.

How can I change my default tax lot reporting method?

To change your default tax lot reporting method, please reach out to us via the Webull Help Center or call (888) 828-0618. Our hours are Monday through Friday, 8:00 AM to 5:00 PM ET.

What are non-covered tax lots?

Non-covered tax lots refer to transactions that may be reported without a cost basis or purchase date, often due to incomplete transfer information from another firm. It is the taxpayer’s responsibility to report the cost basis when filing their tax return.

Where do I download my transaction history?

App:

1. Tap the Webull logo ➝ History.
2. On the top right, tap Export Orders.
3. Confirm email and tap Submit.

Desktop:

1. Navigate to Account.
2. Once you've entered your trading password, select Orders ➝ Export Orders.
3. Confirm date range and email. Select Ok.

Webull does not provide tax advice. For personalized guidance regarding your tax situation, including reporting requirements and tax implications, please consult with a licensed tax professional. If you have any additional questions or require further assistance, please reach out to us through the in-app Help Center or call (888) 828-0618. We are available Monday through Friday, from 8:00 AM to 5:00 PM ET.