TradeLog Blog

Armen Computing, the makers of TradeLog Software, has published a special report entitled The 1099-B Problem: Why IRS Regulations Have Failed to Meet Cost Basis Reporting Needs. The 25-page report is available as a free e-book download. Why did we publish this report? What is the purpose? To appreciate the answers to those questions let me provide some background about cost basis reporting and the 1099-B.

Many TradeLog users would like to file their taxes with popular programs like TaxACT® or TurboTax®. Of course you likely know that those programs, on their own, often cannot handle Form 8949 reporting for active traders. That is why you use TradeLog! But how do you e-file with TaxACT® or TurboTax® and use your TradeLog generated Form 8949?

Traders of option contracts sometimes overlook adjustments that need to be made for accurate tax reporting. TradeLog can make these adjustments easier with a few important functions. Here are three tips for option traders:

Each year during tax time the TradeLog support team sees reports of greater difficulty using brokerconnect for importing trade history from certain brokers. Oftentimes the problems are a result of heavy traffic on the broker’s servers or the size of the data download. Because of these reasons there may not be much that can be done to resolve the problem, other than to try again later. But here is a tip that may help you if you experience brokerconnect difficulty…

Some major brokers have taken a troubling position in the way they report wash sales on the 1099-B for short sales. This caused big problems when taxpayers tried to reconcile and understand their 2011 1099-B reports. But it appears some brokers continue to use this baffling and incorrect method, which will cause more tax reporting problems for 2012 tax year.

Exchange traded funds (ETFs) are becoming more and more popular. Did you know that ETF options can have special tax handling? Some of these options qualify as section 1256 contracts. Under Section 1256 the gains and losses are treated as 60% long-term and 40% short-term capital gains/losses, regardless of the holding period. What qualifies an ETF option as Section 1256 depends on it's structure and whether the option is listed or over-the-counter.

There are many misconceptions that exist about tax reporting for traders and investors. Here are the top two myths, and the facts you need to know…

Do you trade futures or index options? If so, then you need to know about newly enhanced support for these instruments in TradeLog software. With the release of TradeLog version 9.3 traders and investors can not only identify section 1256 contracts but also generate accurate tax reporting at year-end.

As a new year approaches you may be wondering what’s in store for 2012 tax filing. Here is some early information to help you plan and prepare.

An article in last week’s Investopedia.com explained some of the broad differences in brokerage houses. One aspect many investors and traders give no thought to when choosing a broker is the necessary tax reporting. The 2011 tax year revealed disturbing problems as some brokers simply could not provide accurate 1099-B reports for many clients!