Reporting & compliance
Cost Basis Tracking Across Multiple Purchases
If you built your position in more than one purchase, each tranche can have its own basis, date, and holding-period clock.
What it is
An original SAFE plus a later secondary top-up, or shares bought across two different rounds, means you're holding multiple tranches — each with its own cost basis and acquisition date, even though they may show up as one combined position informally.
Why it matters for a secondary
Selling only part of your stake requires identifying which specific shares you're treated as selling. Without a specific-identification election on record, the default (FIFO — first acquired, first sold) applies automatically, which can change both your taxable gain and, critically, which tranche's holding-period clock counts for QSBS purposes.
Quick facts
- Default method with no election
- FIFO — earliest-acquired shares are treated as sold first
- Specific identification
- Must generally be documented at or before the time of sale
- Why it matters for QSBS
- Each tranche has its own acquisition date and holding-period clock — see QSBS & Section 1202
Common mistake: Treating a partial sale's basis as one blended average across all tranches without documenting a specific-identification election before the sale.