alexlwn123/tax-lots

Tool for tracking tax lots within an order book

Tax Lot Selection Task

This tool automates tax lot selection based on a provided algorithm. It utilizes a priority queue to efficiently

Requirements

• Create an executable script which takes one argument and handles input from stdin
• Process an ordered transaction log read from stdin in the format of date,buy/sell,price,quantity separated by line breaks
• The argument passed into the script determines the tax lot selection algorithm
  • fifo - the first lots bought are the first lots sold
  • hifo - the first lots sold are the lots with the highest price
• Keep track of lots internally by an incrementing integer id starting at 1
  • Buys on the same date should be aggregated into a single lot, the price is the weighted average price, the id should remain the same
• Print to stdout the remaining lots after the transaction log is processed in the format of id,date,price,quantity
  • price should have two decimal places
  • quantity should have eight decimal places

Install

• Requires Python3 to be installed

• Clone the repo and install dependencies within a virtual environment

git clone git@github.com:alexlwn123/tax-lots.git
cd tax-lots

• Opitonal - Activate a virtual environment (MacOS instructions)

python3 -m pip install venv
python3 -m venv env
source evn/bin/activate

• Install dependencies

pip install -r requirements.txt

Usage

• Run the script

echo 'echo -e '2021-01-01,buy,10000.00,1.00000000\n2021-02-01,sell,20000.00,0.50000000' | python taxes.py fifo

• Help menu

python taxes.py -h

Testing

• Run the tests

python test.py -v

Build & Run as Executable

• Build as an executable

pyinstaller --onefile taxes.py

• Run the executable

cd dist
echo -e '2021-01-01,buy,10000.00,1.00000000\n2021-02-01,sell,20000.00,0.50000000' | taxes fifo

Production Considerations / Next Steps

If this was going to production, what else should be considered?

• Logging
  • Implement detailed logs of calculations and all financial transactions for auditing
• Testing
  • Add edge cases to verify accuracy of float math
  • Add cases with large inputs to test performance
  • Add e2e tests with large data streams to test performance
  • Add tests to verify accuracy of intermediate states within logs
• Documentation
  • Provide additional examples
  • Provide instructions for more environments
• Additional Features
  • Additional selection algorithms
  • Refactor code to make it easier to add additional algorithms
  • Options for lot batching (other than each day)
  • Additional formats for input/output (csv, json, xml, etc.)
  • Interactive prompts to improve the experience of the CLI
  • Pretty print, table view
  • Simple UI for converting files
  • Issolate the business logic from the CLI tool
    • Create a library containing only the calculation engine
  • Cache intermediate states to help recover progress in case of partial failure
  • Multiple currency support
  • Tax calculations