Author Topic: Does M1 Finance support specific identification of tax lots?  (Read 307 times)

less4success

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Does M1 Finance support specific identification of tax lots?
« on: September 08, 2021, 11:34:30 AM »
I scoured the web and couldn't find an answer:

Does M1 Finance support specific identification of tax lots?

With Vanguard, when I go to sell, it gives me a list of tax lots and I just check the ones I want to sell (in full or in part). I assumed that this would be trivially easy at all normal brokerages, but, not only is that not the case, M1 Finance doesn't really give you a normal brokerage account in the first place.

Unless someone else has experience otherwise, I'm going to assume M1 Finance doesn't support anything other than average cost, single category.

For context: I know it's a bit more work to use specific identification, but it's saved me a good chunk on taxes by letting me take losses pre-FIRE and defer the gains until post-FIRE when I'm in the 0% long-term capital gains bracket.

boarder42

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Re: Does M1 Finance support specific identification of tax lots?
« Reply #1 on: September 08, 2021, 11:38:23 AM »
no they do not.  i asked this question to them about 1 year ago - and they decide what to sell and when based on their algorithm.

boarder42

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Re: Does M1 Finance support specific identification of tax lots?
« Reply #2 on: September 08, 2021, 11:39:58 AM »
Thank you for reaching out to M1 Finance.

M1 Finance uses a tax-minimization strategy for any sell orders in your account.

When M1 sells securities, we prioritize the lots to sell in this order:

Losses that offset future gains
Lots that result in long-term gains
Lots that result in short-term gains

boarder42

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Re: Does M1 Finance support specific identification of tax lots?
« Reply #3 on: September 08, 2021, 11:43:36 AM »
further to even see which lots you have available to sell you have to go to their clearing firm outside of their software to see the specific lots available to sell.  But you can't dictate what they will sell.  And i couldn't get clarity on which long term gains would be sold first the highest gains or the lowest gains.  Since its a tax minimizing strategy i assume they would sell the lowest gains first which has implications in future tax years.

less4success

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Re: Does M1 Finance support specific identification of tax lots?
« Reply #4 on: September 08, 2021, 12:02:16 PM »
further to even see which lots you have available to sell you have to go to their clearing firm outside of their software to see the specific lots available to sell.  But you can't dictate what they will sell.  And i couldn't get clarity on which long term gains would be sold first the highest gains or the lowest gains.  Since its a tax minimizing strategy i assume they would sell the lowest gains first which has implications in future tax years.

Wow, that was an amazingly fast and complete response! Thank you! Their algorithm isn't what I'd choose for tax gain harvesting, but it sounds reasonable in general.

Honestly, I might need to change my mindset from optimizing for maximum money (and minimum taxes) to optimizing for least time spent thinking about money. Bonus: I'm sure my SO would appreciate the simplicity if I got flattened by a bus someday.

boarder42

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Re: Does M1 Finance support specific identification of tax lots?
« Reply #5 on: September 08, 2021, 12:08:40 PM »
further to even see which lots you have available to sell you have to go to their clearing firm outside of their software to see the specific lots available to sell.  But you can't dictate what they will sell.  And i couldn't get clarity on which long term gains would be sold first the highest gains or the lowest gains.  Since its a tax minimizing strategy i assume they would sell the lowest gains first which has implications in future tax years.

Wow, that was an amazingly fast and complete response! Thank you! Their algorithm isn't what I'd choose for tax gain harvesting, but it sounds reasonable in general.

Honestly, I might need to change my mindset from optimizing for maximum money (and minimum taxes) to optimizing for least time spent thinking about money. Bonus: I'm sure my SO would appreciate the simplicity if I got flattened by a bus someday.

i feel like youre processing the same stuff i was a year ago.  Thought currently i do not care about what lots i'm selling as i dont plan to sell tax lots in the near future I plan to use margin

bacchi

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Re: Does M1 Finance support specific identification of tax lots?
« Reply #6 on: September 08, 2021, 02:52:19 PM »
further to even see which lots you have available to sell you have to go to their clearing firm outside of their software to see the specific lots available to sell.  But you can't dictate what they will sell.  And i couldn't get clarity on which long term gains would be sold first the highest gains or the lowest gains.  Since its a tax minimizing strategy i assume they would sell the lowest gains first which has implications in future tax years.

Wow, that was an amazingly fast and complete response! Thank you! Their algorithm isn't what I'd choose for tax gain harvesting, but it sounds reasonable in general.

Honestly, I might need to change my mindset from optimizing for maximum money (and minimum taxes) to optimizing for least time spent thinking about money. Bonus: I'm sure my SO would appreciate the simplicity if I got flattened by a bus someday.

For this reason, most of my M1 money is in tax advantaged accounts. I have a small brokerage account there but my main brokerage account is at Vanguard, where I can do specific lots.