Specific Identification Before Trade | MSFT FIFO vs Selected Lot
PROOF LOG #017
Specific Identification Before Trade | MSFT FIFO vs Selected Lot
Prepared before trade. Reviewable after audit.
Default FIFO would hit the 2016 low-basis MSFT lot.
FDL carries the CPA-prepared 2024 Target Lot ID through the run.
FIFO would sell the old low-basis lot.
The CPA prepared the 2024 high-basis MSFT lot before trade.
FDL carried that Target Lot ID into the board, the Tax Report, and the Audit Trail.
The result: $1,238,280 of Specific ID differential made reviewable.
WATCH THE RECONSTRUCTION
Watch a pre-trade lot instruction become a reviewable Specific ID result.
- FIFO would have consumed the 2016 low-basis MSFT lot
- the CPA prepared the July 2024 MSFT lot as the selected lot before trade
- Tax Alpha Dashboard shows $1,238,280 of Specific ID differential
- Tax Report shows a $(159,360) LONG loss from the selected lot
- Audit Trail shows the 2024 lot closed and the 2016 lot preserved
EXECUTIVE PROOF
FIFO Default
- old low-basis lot would leave first
- FIFO baseline creates a large gain
- the 2016 MSFT lot becomes exposed
- the tax result follows default inventory order
FDL Registry of Truth™
- prepared Target Lot ID flows through the run
- Tax Alpha Dashboard surfaces $1,238,280 of Specific ID differential
- Tax Report reflects the selected high-basis lot
- Audit Trail preserves which lot left and which lot stayed
PHASE 1 — THE FIFO DEFAULT
FIFO would hit the 2016 low-basis MSFT lot.
That default path would consume 3,000 shares from the old lot.
FDL keeps that baseline visible as the comparison point.
Default order is not the same as prepared choice.
PHASE 2 — THE PRE-TRADE INSTRUCTION
The CPA prepares the 2024 high-basis lot as the Target Lot ID.
That prepared instruction is entered before the sale is evaluated.
FDL carries the selected lot through the run.
This is not retroactive lot picking.
PHASE 3 — THE REVIEWABLE RESULT
Tax Alpha Dashboard surfaces the $1,238,280 Specific ID differential.
Tax Report reflects a $(159,360) LONG loss from the selected lot.
Audit Trail shows the 2024 lot closed and the 2016 lot preserved.
Prepared before trade. Reviewable after audit.
FORENSIC EVIDENCE
What must remain intact
- Pre-trade Target Lot IDThe selected July 2024 MSFT lot must remain tied to the sale.
- Selected 2024 lotThe high-basis lot must be the lot consumed in the Tax Report.
- Preserved 2016 lotThe old low-basis lot must remain open in Audit Trail.
- FIFO differentialThe baseline difference must remain visible without becoming a recommendation.
What FDL makes legible
- Tax Alpha DashboardShows $1,238,280 of Specific ID differential.
- Tax ReportShows the selected-lot LONG loss.
- Audit TrailShows the selected lot closed and the old lot still open.
- TransactionsCaptures the CPA-prepared Target Lot ID before the run.
This is the point of the white-box architecture:
prepared instruction, board value, filing result, and lot trace stay separate and reviewable.
WHY THIS CASE MATTERS
Specific ID only works if the lot choice is made and preserved before the sale becomes a filing result.
For UHNW taxable accounts, that choice can change the reported result by seven figures.
The danger is not only choosing the wrong lot.
The danger is losing proof of the prepared choice.
WHAT FDL IS SHOWING HERE
FDL is not a recommendation engine.
FDL does not bless retroactive lot picking.
FDL carries a prepared pre-trade lot instruction through Tax Alpha Dashboard, Tax Report, and Audit Trail.
The value is reviewable Specific ID execution.
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