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.
Under the prepared selected-lot record, the 2024 lot is consumed and closed while the 2016 low-basis lot remains open.
FIFO would sell the old low-basis lot.
The prepared record identifies the 2024 high-basis MSFT lot and includes a timely broker-facing instruction plus supporting execution or confirmation evidence.
FDL verifies that evidence-supported selected-lot record and carries the prepared path into the board, Tax Report, and Audit Trail.
The result: a $1,238,280 comparative differential between the FIFO baseline and the prepared selected-lot path, made reviewable—not guaranteed tax savings.
Proof Summary
Problem: FIFO can consume an old low-basis MSFT lot unless a timely broker-facing instruction identifies the selected lot and supporting execution or confirmation evidence preserves that identification.
Prepared input: The prepared record includes a CPA-prepared Target Lot ID, a timely broker-facing instruction identifying the 2024 lot, and supporting execution or confirmation evidence.
Board result: Tax Alpha Dashboard shows the $1,238,280 comparative differential between the FIFO baseline and the prepared selected-lot path, Tax Report reflects the selected-lot LONG loss, and Audit Trail preserves which lot left and which lot stayed.
Boundary: FDL does not choose lots, issue broker instructions, determine their legal effectiveness, or bless retroactive lot picking. It verifies the prepared, in-scope record against the supplied instruction and supporting evidence.
WATCH THE RECONSTRUCTION
Watch the prepared instruction, broker-facing evidence, and selected-lot result become reviewable.
- FIFO would have consumed the 2016 low-basis MSFT lot
- the prepared record identifies the July 2024 MSFT lot and includes a timely broker-facing instruction plus execution or confirmation evidence
- 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™
- the prepared Target Lot ID, broker-facing instruction, and supporting evidence flow through the review
- 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 AND EVIDENCE
The CPA-prepared Target Lot ID defines the intended review path.
A timely broker-facing instruction identifies the 2024 lot, and supporting execution or confirmation evidence supports the selected-lot record supplied to FDL.
FDL verifies that prepared, in-scope record and carries the selected-lot path 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
- Selected-lot evidenceThe CPA-prepared Target Lot ID, timely broker-facing instruction, and supporting execution or confirmation evidence 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 and supplied broker-facing evidence before the run.
This is the point of the white-box architecture:
prepared record, supporting evidence, board value, filing result, and lot trace stay separate and reviewable.
WHY THIS CASE MATTERS
The selected-lot path requires timely broker-facing identification and supporting execution or confirmation evidence 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 the instruction or supporting confirmation evidence.
WHAT FDL IS SHOWING HERE
FDL is not a recommendation engine.
FDL does not bless retroactive lot picking.
FDL verifies an evidence-supported, prepared selected-lot record across Tax Alpha Dashboard, Tax Report, and Audit Trail.
The value is reviewable selected-lot evidence and lot-level traceability.
CHOOSE YOUR NEXT STEP
FDL — deterministic tax infrastructure for prepared, in-scope records.