Operations
Tax-lot accounting basics for family offices
FIFO, LIFO, HIFO and average cost explained, and how lot selection changes realized gains.
The FLIORE Compliance Desk
Family-office compliance research
6 min read
Updated 2026-07-01
Key takeaways
- A tax lot is a batch of a holding bought at a specific price and date.
- The cost-basis method chosen changes realized gain on a disposal.
- No market data is needed — lots come from your own trades.
What a lot is
Each purchase of a holding creates a lot: a quantity at a price on a date. When you sell, you must decide which lots the sale draws from — and that choice changes the realized gain.
The methods
FIFO sells the oldest lots first; LIFO the newest; HIFO the highest-cost first (minimising gains); average blends all lots to one cost. The same disposal produces different realized gains under each — which is why the method matters and should be applied consistently.
FAQ
Which method is best?
It depends on jurisdiction and objective — HIFO often minimises current gains; some regimes mandate a method.
Sources
- Jurisdiction tax codes — Method availability varies.
Related guides
Compliance, built into the platform
FLIORE is the only family office platform with KYC and compliance built in.
Explore FLIORE