Using Trade Accounting Software to Assist Your CPA

Published: June 9, 2011
Tagged: Trader Taxes

Most CPAs and trading accountants dread tax time! They don’t have the same perks as the average Joe who can file a W-2 in 20 minutes by using a popular tax software package! Instead, trading accountants have to undergo the grueling process of piecing together every trade for the tax year being filed. This is why the pricing of professional accounting services has dramatically increased over time. Of course, this does not mean that you should assume that filing your own taxes is the answer. There are clear advantages to choosing a good professional trading accountant as discussed in the previous article. However, as a user of TradeLog trade accounting software, you can compromise by assisting your CPA in filing your taxes, which can save you time and money!

Obviously, there needs to be some form of communication between you and your CPA before taxes are due. This should entail more than a simple phone call letting them know they are hired for another year! For instance, have you considered sending a quarterly gains and losses report to your accountant? This can help them overall to determine what preparations will be needed come tax time. This can ensure a more meticulous filing and can enhance the quality of tax advice by knowing where you stand, with no extra cost to you!

In addition to a gains and losses report, TradeLog users can provide other reports and, if necessary, in different formats for tax purposes. For cash accounting, you have two main tax reports to choose from. They are the TradeLog Gains and Losses or the official IRS Schedule D-1 report. For MTM, (Mark to Market accounting), you have 3 reports to choose from depending on the year of filing. These include the Form 4797 attachment, Section 481 Adjustment, and the Securities Mark-to-Market forms. All of these forms can be saved in a PDF format or copied to the Windows clipboard to be pasted in your favorite word or spreadsheet processor. This is straight forward for stocks and options, but not for futures or FOREX trading.

It is true, the brokers provide conversion rates and multipliers according to the current markets point system, but many mistakes have been made. This is especially true with newer trading instruments that are becoming more popular with experienced traders, such as ETFs and ETNs. Your broker may classify these as a section 1256 contract when you want to treat them as stock or vice versa. Normally, your CPA would side with the broker and trust the net total profit or loss on the 1099. However, as a TradeLog user, you can produce a customized gains and losses report based on how you would like a certain security or instrument to be accounted by using the futures settings in the software. You then can send this to your CPA so that they can make the proper adjustments to your filing.

What’s even better is if your CPA uses TradeLog software as well! In this way, you can simply send them your data file as the year progresses or at year end. Trader accounting firms such as Green Trader Tax have been doing this for years. Sharing your TradeLog data file can be deemed as the best form of assistance as everything your CPA needs will be at their fingertips.

A trader’s main responsibility is trading. Don’t waste weeks or even months gathering and compiling data on your taxes, or expect a CPA to spend just as long doing the same thing. Many have ended up losing time and money. If you are not already doing so, try assisting your CPA. The purpose of TradeLog software is to manage your trade accounting and generate the reports you need, easily and accurately. Whether you are filing taxes yourself, or using a CPA, TradeLog makes it easy.

Please note: This information is provided only as a general guide and is not to be taken as official IRS instructions. Cogenta Computing, Inc. does not make investment recommendations nor provide financial, tax or legal advice. You are solely responsible for your investment and tax reporting decisions. Please consult your tax advisor or accountant to discuss your specific situation.