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

When it comes to trading activity, it’s wise to do separate accounting for gains and losses vs. expenses. A consumer off-the-shelf accounting program is fine for keeping track of expenses, non-trading income, home office deductions, and itemized deductions. But when it comes to trade accounting for securities, one may need a specialized software program or professional service. Futures gain/loss accounting may not be necessary, as traders generally rely on the one-page 1099-B with summary reporting, using MTM reporting. For forex contracts, taxpayers can rely on the broker’s annual tax reports and use summary reporting. Spot forex is not a “covered security,” so there are no Form 1099-Bs.

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

Securities accounting

Securities brokers made advances in tax-compliance reporting due to Congressional legislation and implementing IRS cost-basis reporting regulations phased in between 2011 and 2017.

Taxpayers report proceeds, cost basis, wash-sale loss, other adjustments, holding period, and capital gain/loss on Form 8949. According to the form’s 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 a Form 8949. After all, the IRS gets a copy of the 1099-B with all the details.

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

See Forms 8949 and 1099-B issues and Wash Sale Losses.

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