Highest Cost is a tax lot-matching method that seeks to maximize losses while minimizing gains. Sales are paired based on the following rules:
- First, it looks at all possible options for matching a closing trade to an open lot.
- If any possible matches would result in a loss, the method chooses the match that results in the largest possible loss.
- If no possible match would result in a loss, the method chooses the match that results in the smallest possible gain.