Q: Why are lots changing on the Tax Impact Report each time I run it?
A: When positions are placed into the transition sleeve, only the number of shares is allocated—not the specific lots. Lots are not tied to sleeves. Each time an analysis runs, the system looks across all available lots and selects one according to the account’s designated accounting method. Market prices and cost basis can shift between analyses, which may change which lot is “next in line.”
Key Point: Lot order is dynamic and recalculated each run. Changes are expected based on market values, cost basis, and the accounting method in effect.
Q: Why do I see Sales in my Transition Sleeve?
A: When a model can use a position already in the transition sleeve, the system moves those shares into the model sleeve. This movement appears as a “sale” in the Transactions tab, but it is actually an internal journal entry, not a market liquidation. The system will also show cash proceeds in the transition sleeve, which are then swept out to complete the journal into the model sleeve.
Key Point: These “sales” reflect internal reallocations of shares and cash between sleeves, not actual trades in the market.
Q: How does the system decide which positions to liquidate?
A: The system follows a step-by-step process to balance transition progress with tax efficiency:
Losses Are Prioritized – The system liquidates all loss positions first.
Offsetting Gains – Next, it identifies gains that can be offset by realized losses.
Highest Value Positions – Among remaining positions, the system liquidates the highest market value positions with the lowest gain first.
Lot Selection – Lots are chosen based on the account’s disposition method. (Future updates will add support for specific-lot selection for custodians that allow it.)
Key Point: The liquidation order is designed to maximize tax efficiency while progressing toward the target allocation.