Accounting/Tax Software of Daytraders??
- Thread starter kowboy
- Start date
Def,
The gross proceeds was the exact problem with prior 1099's. That number on the 1099 wasn't the amount that is credited to the account after a trade. Thus if you traded 500 shares every time, you'd have to make an adjustment of $5 to the 1099 amount for every trade. The 1099 totals would then be overstated in comparison to totals entered on Sch "D". Instant RED FLAG. Sometimes the totals per item appears insignificant, however, if the client is doing 20 RT/day, it adds up to a significant discrepancy.
The 1099 didn't reflect the economic reality of the account holder. Made us tax people work harder to make sure the client didn't pay more than absolutely necessary.
Nice to read that net totals will be reported this year.
Later,
Cracked
The gross proceeds was the exact problem with prior 1099's. That number on the 1099 wasn't the amount that is credited to the account after a trade. Thus if you traded 500 shares every time, you'd have to make an adjustment of $5 to the 1099 amount for every trade. The 1099 totals would then be overstated in comparison to totals entered on Sch "D". Instant RED FLAG. Sometimes the totals per item appears insignificant, however, if the client is doing 20 RT/day, it adds up to a significant discrepancy.
The 1099 didn't reflect the economic reality of the account holder. Made us tax people work harder to make sure the client didn't pay more than absolutely necessary.
Nice to read that net totals will be reported this year.
Later,
Cracked
Reread my post on the bottom of page 4 of this thread. Not only was IB's way of reporting their 1099-B forms legitimate, but if your total sales on your tax form did not match what IB reported on its 1099-B form, then you did something incorrectly. It is a red flag only if you incorrectly filled out your Schedule D.
futures go here.
For commodities, business traders report their capital gains and losses on Form 6781 (Section 1256 contracts). This allows them to split the gains and losses 60/40 on Schedule D: 60 percent long-term, 40 percent short-term.
)Project86
Business trader is someone who trades for living, since you don't you are a not business trader but you still have to use form 6781 to show p/l for commidities trades. Here is scoop of this situation.
People who claim as trader status can deduct their full losses from their trading activity and they can also deduct expenses related to trading such as broker commisions, data fee, computers, books and seminars etc. One the other hand if you do not claim trade status you are limited to deduct 3000 dollars capital loss in a tax year and you can not claim other expenses.
Business trader is someone who trades for living, since you don't you are a not business trader but you still have to use form 6781 to show p/l for commidities trades. Here is scoop of this situation.
People who claim as trader status can deduct their full losses from their trading activity and they can also deduct expenses related to trading such as broker commisions, data fee, computers, books and seminars etc. One the other hand if you do not claim trade status you are limited to deduct 3000 dollars capital loss in a tax year and you can not claim other expenses.
IRS does not require a list of each and every trade, which would be ludicrous. Instead, I have been advised to do the following:
- I give a summary line on my Sched D, for each brokerage account that I trade in during the year, listing my P/L total, which should match exactly with your broker's statement.
- I keep a detailed spreadsheet of each transaction.
- Print out the monthly detailed statement that your broker sends you, and keep it for your records.
- Attached to my tax return is a letter, where I state that I'm a Day Trader, and that I am providing IRS with these (aforementioned) summary lines on my Sched D, and that I will furnish details (all trade history) upon request.
This has worked for me, and I believe is totally fair. To have to enter each and every trade for the year into a tax program would be ludicrous, would kill to many trees, and is something the IRS really does not want to have to look at anyway.
- I give a summary line on my Sched D, for each brokerage account that I trade in during the year, listing my P/L total, which should match exactly with your broker's statement.
- I keep a detailed spreadsheet of each transaction.
- Print out the monthly detailed statement that your broker sends you, and keep it for your records.
- Attached to my tax return is a letter, where I state that I'm a Day Trader, and that I am providing IRS with these (aforementioned) summary lines on my Sched D, and that I will furnish details (all trade history) upon request.
This has worked for me, and I believe is totally fair. To have to enter each and every trade for the year into a tax program would be ludicrous, would kill to many trees, and is something the IRS really does not want to have to look at anyway.