Stock (or equity) lots are “batches” of shares you’ve acquired on the same date at the same price. For example, let’s say you exercise some stock options on May 15, 2023, receiving 1,000 shares for $5.25 each. You exercise more options a year later, and receive 1,000 more shares for $7.33 each. Then, your company distributes a stock dividend in the form of another 50 shares priced at $7.45 each. You now hold three stock lots. When you sell some of your shares, you can designate which lots you’re selling from. This dictates the shares’ cost basis, as well as whether any capital gains are short- or long-term. Identifying specific lots can help manage the tax ramifications of a sale.
