Tax Lot Preferences

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.

Webull uses FIFO as the default tax lot reporting method. As an alternative to FIFO, you can choose from four other options: LIFO, HIFO, LOFO, and MinTax. These tax lot preferences are described in detail below:

First In, First Out (FIFO)

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.

Last In, First Out (LIFO)

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.

Highest In, First Out (HIFO)

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.

Lowest Cost, First Out (LOFO)

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.

Minimum Tax (MinTax)

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.

Please note that modifying the tax lot reporting method will only affect the profit/ loss reported on the 1099 tax form. The Webull app will calculate profit/loss based on the average purchase price, regardless of the effective tax lot reporting method. If the tax lot reporting method is modified, the reporting method cannot be retroactively applied and will only apply to future transactions. 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, 9 AM to 4:15 PM EST.

Non-covered tax lots

Transactions reported as noncovered tax lots may be reported without a cost basis or purchase date. These securities may have been assets transferred into Webull without the full details from the sending 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.