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MyunderratedLife (95.59)

Filing Taxes, how to record trades?



February 17, 2012 – Comments (4) | RELATED TICKERS: HRB , EMC , ACC

So I've been a bad fool and have descended into "day trading" or "swing trading."

In 2011 I had 653 trades.  I ended the year 7.8% up (versus flat for the S&P), which, considering the amount of effort it took, was probably not worth it.  To make matters worse I did not elect to mark-to-market my tax treatment in 2011.  

My question is, is there anyway lessen the burden of having to list EACH and every trade?  It would be less painful if the IRS just flogged me instead.

4 Comments – Post Your Own

#1) On February 17, 2012 at 10:02 AM, edwjm (99.89) wrote:

Alas, the IRS states emphatically this year that you must list each and every trade separately and they even have a new special form for doing so called 8949.  This is true even though your broker is aslo required to fill a form with the IRS stating each and every trade separately with dates, profits, losses, etc.! 

Since they already have the information from your broker, it makes no sense for them to make it so complicated for the filer.  For those who wish to file electronically, one must either list each and every trade separately on the electronic filing on form 8949 or else summerize them electronically on form 8949 in the efile and then send a separate paper listing of each and every trade on a paper edition of form 8949 by snail mail. 

I see no reason whatsoever why the IRS couldn't match the broker's form 1099 with the tax return if only a summary line was listed on form 8949 (or even the old schedule 'D' for that matter) for each brokers 1099 and separate listing of each and every trade not covered by a broker's 1099, but the IRS explicitely states that this is not allowed: each and every trade must be listed separately whether covered by a broker's 1099 or not.  For more on these silly redundencies, please see the instructions for Schedule 'D' and the instructions for the new Form 8949.

Professional tax preparer must be the only ppl that will benefit from these new rules.  The new rules will increase both the number of their customers and the amount they will feel comfortable in charging each customer.

Color me red for angry.

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#2) On February 25, 2012 at 12:38 AM, MyunderratedLife (95.59) wrote:

wow its worse than I thought then.

I have a question, if my broker didn't let me choose "lots" when buying or selling, what is the default?  LIFO?  FIFO?

Thanks for your help edwjm!

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#3) On February 27, 2012 at 11:33 AM, edwjm (99.89) wrote:

FIFO was the traditional default for almost all brokerage houses, but you better check with your broker to be sure.

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#4) On February 27, 2012 at 12:07 PM, outoffocus (22.88) wrote:

Some tax software have features that allow you to import your trades for the year if you can get them into an excel or .csv format.  One software in particular is Drake, but that is a preparer software.  If you preparing on your own I would do some research for a software (turbotax, taxact, etc.) that has a schedule D import feature.  Hope this helps.

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