Tag Archives: Tracker

Accounting For Traders

September 6, 2014 | By: Robert A. Green, CPA

Presented by CPAs Robert A. Green and Darren Neuschwander

The best current accounting solutions for traders including Tradelog and a review of our survey results.

*The results of their recent survey on trade accounting software and solutions.
* Accounting software and other solutions for generating Form 8949 and/or Form 4797 with line-by-line reporting of each trade.
*The pros and cons of the leading solutions available and which one may be best for you.
*Deductr, an expense accounting and tax-compliance solution. (starts at 37 minute mark)
*How to pair a specialized trade accounting solution with a customized expense accounting solution.

Accounting Solutions

August 29, 2014 | By: Robert A. Green, CPA

I recommend keeping your accounting for trading gains and losses separate from expenses. A consumer off-the-shelf accounting program is acceptable for keeping track of expenses, non-trading income, home office deductions, and itemized deductions. But when it comes to trade accounting for securities, you may need a specialized software program or professional service. Futures gain/loss accounting may not be necessary, as traders generally can rely on the one-page 1099-B with summary reporting using MTM reporting. Forex contract traders can depend on the broker’s annual tax reports and should use summary reporting. Spot forex is not a covered security, so Form 1099-B isn’t issued.

U.S.-based cryptocurrency exchanges issue Form 1099-K, 1099-Misc., or 1099-B to taxpayers reaching a certain threshold of transactions, and most provide online tax reports. Consider a cryptocurrency trade accounting solution.


Taxpayers should report proceeds, cost basis, wash-sale loss, other adjustments, holding period, and capital gain/loss for each trade on Form 8949. It’s inappropriate to use summary reporting. Details for Form 8949 are on broker-issued Form 1099-Bs. According to Form 8949 instructions, taxpayers without wash sales and other adjustments to cost basis may enter totals from broker 1099-Bs directly on Schedule D and skip filing Form 8949. After all, the IRS gets a copy of the 1099-B with all the details.

Many taxpayers believe that they don’t have wash sales when they often have many to report to comply with IRS rules for taxpayers, which differ from rules for brokers.


Traders probably do not need a trade accounting solution for Section 1256 contracts since broker 1099-Bs are generally accurate. Section 1256 includes U.S. futures, broad-based indexes (stock index futures), options on both, and non-equity options (see Chapter 3).

Summary MTM reporting means taxpayers can enter the “aggregate profit or loss on contracts” from Form 1099-B on Form 6781. MTM is exempt from wash-sale rules since there are no open positions or adjustments to consider at year-end. Broker tax reporting matches taxpayer reporting.

See Green’s Trader Tax Guide Chapter 4, Accounting for Trading Gains & Losses.