🧩 Transition Budget Logic Explained

Core Logic

Transition budgets apply only to:

Transition Sleeve positions
Managed Portfolio sleeve transition activity

Once positions enter model sleeves:

They trade independently
Transition budgets no longer apply

Scenario Budgets vs Custom Budgets

Scenario Budgets	Custom Budgets
Relative trade-off tools only Ignore YTD realized gains	Evaluate realized gains/losses Use remaining transition capacity

Budget Exhaustion Behavior

Once exhausted:

System assumes no remaining gain budget
Only loss harvesting opportunities may continue

🧩 Scheduler Operational Behavior

Scheduler Timing

Scheduler activity begins after reconciled tax lot processing.

Best-Efforts Trading

Trades generated later in the day may execute next business day.

Trade Flow

Transition trades automatically flow into the rebalancer.

There is currently:

No review queue
No approval step

Gain Estimate Variance

Market movement between:

Trade generation
AND
Trade execution

…may impact realized gain amounts.

🧩Lot Selection & Tax Impact Logic

Lot Selection Process

Lots are dynamically selected during each analysis run.

Lots are NOT permanently tied to sleeves.

Liquidation Order

The system:

Harvests losses first
Offsets gains
Prioritizes highest value / lowest gain positions

Accounting Method Dependency

Lot selection follows the account’s designated disposition method.

Why Lots Change Between Runs

Changes may occur due to:

Market movement
Updated cost basis
Different gain/loss sequencing

🧩 Transition Restart Rules

One Transition Per Account

Accounts support only one active transition structure.

Restart Requirements

To fully restart:

Remove model sleeve allocations
Consolidate account
Rebuild transition structure

🧩 Transition Tool Logic, Behaviors, & Rules