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Planning, Review & Preparation Electing Mark-to-Market Trading through an entity Trader definitions Tax information & news Discussion Board, F.A.Q., Futures, Benefit Plans & other info Search this site add text to search window		Copyright© 1999, 2000, 2001, 2002, 2003, 2004 & 2007 Colin M. Cody, CPA and TraderStatus.com, LLC, All Rights Reserved.
		A few years ago there were approximately five million people who were registered to trade stocks on-line ¹. In April 2000 about 50,000 were day traders³ These numbers are projected to increase four-fold to more than twenty million households² and many of them need to make the choice to file there taxes as an investor or to file using trader status. There is no reason why you, as a qualifying active trader, cannot file as a trader status taxpayer on your own using readily available tax preparation software. All it takes is your time and a good, thorough understanding of the methods used to file properly as a trader status taxpayer. How thorough? Find out now, by taking this quiz, if you need an accountant and this summary on hiring a tax pro to prepare your taxes or not! While trader status concepts are more complex than anything in the quiz... If you do score well, you probably have what it takes to do just fine if preparing your own trader status tax return! Otherwise, please consider using TraderStatus.com Become your own expert on Trader Status tax filings - order the TradersTaxPlan™ documentation, instructions and forms... Click here for Schedule D / Form 4797 software. But use CAUTION: Tax Court: "TurboTax" Defense, Still a No-Go Washington (Nov. 15, 2006) - The U.S. Tax Court has again rejected a taxpayer’s attempt to pin the blame for their negligent tax return on tax preparation software On Nov. 9, the court handed down an opinion finding against a petition filed in New Jersey by Henry R. Broderick. According to court records, the petitioner blamed defects in his income tax return on software that he claimed to use in preparing the Form 1040 return. Broderick, who owns a consulting firm, understated his taxable income by more than $50,000, leaving him with no tax on his 2002 return. However, the court said the blame rested with taxpayer negligence -- which includes failure by the taxpayer to keep adequate books and records or substantiate line items properly. According to the court, "Such a program is only an aid for preparation of a return and depends on careful entry of accurate information, which petitioner manifestly failed to do. Petitioner admits that he has the education to prepare and review his income tax return. ... Accordingly, petitioner’s use of software in preparing his return does not constitute reasonable cause for the errors in his return." The court rejected a similar "TurboTax defense" in February. The full opinion for the Broderick case is available at www.ustaxcourt.gov/InOpHistoric/Broderick.SUM.WPD.pdf The TraderStatusTax Notebook site offers a convenient way to organize your tax information (other than individual trades) which can then be forwarded to us to complete and sign your tax return as the CPA preparer. At anytime during the process of entering your data in our online service you should become a full-service client and we can take over your tax file from where you left off, completing the tax work and signing the original tax returns as your CPA preparer. As a securities daytrader you put your expenses on "Schedule C" and a listing of your trades on Schedule D (if a valid Mark-to-Market election was made by April 16, 2002 then use form 4797 instead of Schedule D). Answers to many general questions may be obtained via the site's FAQ listing. Answers to general common daytrader questions may be obtained via email once you start your "Schedule C." More detailed information is available by purchasing our 2002/2003 TradersTaxPlan™ documentation, instructions and forms... ($200) Or you can find blank forms at these web sites: Downloadable IRS Tax Forms Downloadable IRS Tax Forms, year-by-year Downloadable IRS Tax Forms Downloadable State Tax Forms Downloadable State Tax Forms (Yahoo) Downloadable State Tax Forms (Federation of Tax Administrators) Downloadable IRS & State Tax Forms (TurboTax) Downloadable IRS & State Tax Forms (Zillion Forms) Downloadable Canadian Customs and Revenue Agency (CCRA) Tax Forms Canada information Links to Legal Resources and Forms Viewable Legal Bitstream - Tax Case Law Lookup Viewable MegaLaw's Tax Law Page Links to Employer Payroll Tax Registration Employer Payroll Taxes Downloadable State Employment Taxes Google search for CA State Employment Taxes (simply change the State) Google search for CA State Business Taxes (simply change the State) Viewable IRS tax rates and tax brackets Viewable IRS FAQ and other information Viewable Deloitte Tax Guide for 2004/2005 PDF file Viewable IRS Addresses for tax returns Viewable IRS Addresses for tax return (search) Uncle Fed web site Uncle Fed's Tax board NAICS codes (f/k/a SIC Codes) to use on tax returns NAICS Code Online Search NAICS codes (f/k/a SIC Codes) to use on tax returns NAICS Code Online Search U.S. Census Bureau (NAICS codes) to use on tax returns NAICS Code Online Search U.S. City information city-data.com The North American Industry Classification System ( NAICS ) has replaced the U.S. Standard Industrial Classification ( SIC ) System Search. Federal Taxpayer Identification Number (TIN) also known as a Federal Employer Identification Number (EIN) needed for many trader entities may be obtained online at http://www.irs.gov/businesses/small/article/0,,id=102767,00.html The "provisional EIN" number obtained via this internet link is also called an I-EIN or a "two-oh number" since all I-EINs are issued in the format 20-#######, through 2006. Starting in 2007: 26-#######. 27-####### has been used as well. IRS information on TIN / EIN's: IRS form SS-4 IRS Instructions for form SS-4 IRS EIN FAQ IRS publication 1635 "understanding your EIN" While do-it-yourselfers are allowed to get their own TIN using IRS form SS-4 for their trading entity, we request that our clients and soon-to-be clients let us do the application for your TIN to avoid any problems or the raising of "red flags" on your account. You may legally authorize us to do this by signing a print-out of these linked pages: http://www.irs.gov/pub/irs-pdf/i2848.pdf http://www.irs.gov/pub/irs-pdf/f2848.pdf http://www.irs.gov/pub/irs-pdf/iss4.pdf http://www.irs.gov/pub/irs-pdf/fss4.pdf and sending to us. Extensions for filing form 1040 can be obtained by calling (888) 796-1074 between April 1, 2005 and April 15, 2005. Have a rough draft of a filled in extension form 4868 and your 2004 form 1040 when you call this telephone number. 2004 is planned to be the last year that the IRS will offer this option. Do not use this method if you are planning on electing M2M for 2005, which requires attaching the election statement to form 4868 and mailing both to the IRS via certified mail. You may not elect M2M using the telephone method. Where to file your IRS extension request, form 1040 & estimated taxes: http://www.irs.gov/file/content/0,,id=105693,00.html Beginning in 2006 (for 2005 tax returns) for individuals (form 1040) and for businesses (forms 1065, 1120, 1120S), an automatic six month extension (form 4868 or form 7004) will be automatically granted by the IRS. Where to file your business IRS tax returns: http://www.irs.gov/file/index.html Where's my refund? You filed your tax return and you're expecting a refund? You have just one question and you want the answer now - Where the heck is my refund? IRS link: http://www.irs.gov/individuals/article/0,,id=96596,00.html alternative IRS & State link: refunds IRS refund schedule for e-filed tax returns: http://www.irs.gov/pub/irs-pdf/p2043.pdf Tax rates / tax tables: http://www.smbiz.com/sbrl001.html Note, effective with the 2005 form 1040, the IRS said that they no longer accept program print-outs on blank paper, rather they must be properly formatted and printed on IRS Schedule D-1. (This requirement was retracted in January 2006). See below for some of the automated "Trade Matching" or "Schedule D" programs available from other web sites (some of these may also offer free demo or lower priced versions for a restricted number of transactions): Note, effective with 2008, brokers are required to submit form 1099-B no later than later than February 15th of the following calendar year. (the prior law was January 31st) (Pub. L. 110-343, Div. B, §403(a)(3), amended subsec. (b) of IRC §6045) Note, effective with 2011, securities brokers are required to do the trade-matching and provide the gain/loss report to the customer no later than February 15th of the following calendar year. (Pub. L. 110-343, Div. B, §403(a)(2), added subsec. (g) to IRC §6045). To better comply with this new requirement, IRC §6045 §6045A & §6045B cover special new rules for the reporting of options, wash sales, "versus purchase" or VSP sales, transfers of securities into broker accounts, and corporate actions such as stock splits and spin offs. Wolters Kluwer Financial Services Cost Basis Reporting Resource Center New form 1099-B reports to the IRS your wash sales and your FIFO taxable gain/loss for each sale made. Proposed instructions to securities brokers were issued on 12/17/2009 see Reg-101896-09 As of November 2008 IR Regs §1.6045-1(a)(3)(vi) remains unchanged: "[The term "security" means:] An interest in a security described in paragraph (a)(3) (i) or (iv) (but not including options or executory contracts that require delivery of such type of security)." and Regs §1.6045-1(a)(9) remains unchanged "[The term "sale" does not include grants or purchases of options, exercises of call options, or entering into contracts that require delivery of personal property or an interest therein." Meaning - that taxpayers may need to continue to do their own trade matching when it comes to their options trading. FREE gain/loss tracking service Now available to TD Ameritrade Apex clients, this free service powered by GainsKeeper® provides cost basis and capital gains calculations for transactions in TD Ameritrade Apex accounts. Realized gain/loss reporting can help you complete your Schedule D or Form 4797. Apex accounts will be able to access this service from the Balance and Positions page. Reports can be run with or without Wash Sales. A separate open positions Mark-to-Market report can be run for any applicable date. Positions and market values are updated nightly. Also download the report as a spreadsheet .xls. Optional: Send us a "link accounts" invite via your Ameritrade account to access your records directly (then unlink a few days later once the data has been reviewed). Go to [Home] or to [Portfolio & Accounts] then [My Profile] then [Link Accounts] then [Send A Link Request] then input the user ID which we will give to you upon request. Once we are completed, you go through the same procedure again, except select the user ID and click [Unlink Accounts]. FREE gain/loss tracking service* Now available to Think or Swim clients, after being acquired by TD Ameritrade, the web based GainsKeeper® service is on-line for 2009. FREE gain/loss tracking service Now available to Banc of America Investment Services clients, this free service provides cost basis and capital gains calculations. Realized gain/loss reporting can help you complete your Schedule D or Form 4797. Select Year-to-Date Tax, then select the Tax Year. Print/save this summary page to a PDF or to paper. Then select Tax Documents, click the Brokerage 1099 and save this to your computer, preferably as a PDF (with a little work this can be directly saved as a PDF). Again select Year-to-Date Tax, then select the Tax Year. Click Cost Basis Information then select the Closed Positions tab, select the tax year, then click Download, then Open with Excel and save the file. Again select Year-to-Date Tax, then select the Tax Year. then click each [Details] item and save the results (this feature can be buggy). Note: do not use the download into Turbo Tax option, the gain/loss data is error prone and first needs to be reviewed in Excel. FREE gain/loss tracking service Now available to Interactive Brokers clients, this free service provides cost basis and capital gains calculations. Realized gain/loss reporting can help you complete your Schedule D or Form 4797. Select Report Management (Account Management), then select Tax Forms and go to Schedule D Gain/Loss Summary Worksheet. Open, View and then Save both a PDF and a MS Excel file. Note: do not save the Excel as the default HTML/Web, but save it as a spreadsheet .xls. Then (2) view and print (or save) the Form 1099; (3) view and save the IRC Section 1256 Gain/Loss Summary Worksheet as both a PDF and an MS Excel file, and (4) view and save Dividend Report (Schedule B) as an MS Excel file. (5) Then go back and Select Report Management, then select Activity Statements and view and save the Yearly report. New for 2009:* The IB Schedule D has inexplicably begun computing Wash Sales thereby making the report virtually worthless for M2M Traders as well as any Investor with multiple brokerage accounts - Therefore, the gain/loss needs to be done manually. Select Activity Statements, then Full Default Template, Calendar Year 2009, PDF format. View and then Save the PDF. Analysis: 1) Go to M2M Performance Summary and take the total gain/loss Stocks + the total gain/loss Equity and Index Options to use on Schedule D or Form 4797. 2) take the total gain/loss Futures + the total gain/loss Options on Futures to use on Form 6781 3) Go to the last page of the M2M Performance Summary to prove out the above and to get net margin interest and deductible fees 4) Go to Cash Report for FOREX or Cash FX Translation gain/loss. 5) Finally, prove out the ending cash by adding the above to the Starting Cash. FREE gain/loss tracking service Now available to *etrade clients, this free service provides cost basis and capital gains calculations. Realized gain/loss reporting can help you complete your Schedule D or Form 4797. Select Portfolio, then select Gains and Losses (4th tab from the left), Change the start date and end date to "01/01/200X To 12/31/200X." View and then Save as a MS Excel file. FREE gain/loss reporting service Now available to Penson Worldwide clients, this free service provides cost basis and capital gains calculations. Many retail brokerages use Penson for their back office support. Simply request their "P & L Statement" from "01/01/200X To 12/31/200X." This is provided as a PDF of matched trades and any unmatched trades are gatherer in the last pages of the report. This report works out best for active traders who end every year with no open positions, flat, all cash. FREE gain/loss reporting service Now available to Charles Schwab clients, this free service provides cost basis and capital gains calculations. Realized gain/loss reporting can help you complete your Schedule D or Form 4797. Select Account, then select Gain/Loss and go to to the realized Gain/Loss report (Schedule D). Select the appropriate dates, then select Expand All Accounts and then select Export. Also select Account, then select History select (Beyond 24 months). Select Statements select Tax Forms then Search for Documents and select Year End Gain Loss Reporting 200x and save the PDF. Also select 12/31/0x Brokerage Statement and save the PDF. Alternatively: Select Account, then select History and go to the Realized Gain/Loss report, then select previous calendar year - look at the beige band at the top of the page, click "export" > a pop-up window appears, click "OK" Transaction downloading Now available to TradeStation Securities** clients, in three month blocks of data (or other date range), this service provides details on transactions cost basis. Select Account Services, Balances, Positions & Activity and click Tax Activity. Separately download long transactions into Excel or into one of the optional trade matching programs. Then separately download short transactions. Note: do not forget to go back and download all data, three months at a time, then combine the four long transaction downloads into one spreadsheet .xls. Similarly combine the four short transition downloads into one spreadsheet .xls Separately download year-end statements and 1099's under Account Services, Confirmations, Statements & 1099s. FREE gain/loss reporting service Now available to certain other TradeStation Securities clients, this free service provides cost basis and capital gains calculations. Realized gain/loss reporting can help you complete your Schedule D or Form 4797. Select Download Manager, then under Download Criteria select Holdings - Realized Gain/Loss for Prior Year and export to Excel Format. Then to get year-end open positions download the report again for YTD and then select Holdings - Unrealized Gain/Loss (Expanded). Note: verify that all data was downloaded, since the "claimed" maximum download is 1,000 records at a time. Separately download year-end statements and 1099's under Documents, then Statements / Tax Docs. Transaction downloading Now available to Fidelity.com clients, for only the most recent 90 days and only as a download into Quicken or MS Money. Some people believe that this data is filled with errors due to Fidelity's continual, retro-active changes made for wash sales adjustments. From the Fidelity website: Q. Are there any instances in which Fidelity data varies from the manner in which it is displayed by Fidelity? A. Yes. Some transaction types do not appear in the information displayed once you download your account. You can always refer to your account on Fidelity.com or your regular account statements for an accurate representation of your account history. Alternatively, selecting History allows screen views of the last 18 months of transactions which are displayed no more than 90 days at a time. This would require 5 screen shots for a full calendar year and this would need to be done no later than June of the following year. MYcapitalGAIN - online usage "Detect and eliminate wash sells before tax year ends" $0.00 (free) inginet's TradePair - download program "Converts transactions from Interactive Brokers stmts to Sch D" $0.00 (free) AmericanWare's TradeKeeper - download program "Create IRS Schedule D with or without Wash Sale computations" $0.00 (free) to $50 KBH Applications - download shareware program "Mark-to-market profit/loss accounting" $12 Sapphire Bay's TradeMatcher - download program "Helps you prepare the set of matched trades for Schedule D" $34.95 Sapphire Bay's TradeMatcher service "They will do as a service on your data - price per account:" $34.95 Track Your Trades - download program "Generate your own Schedule D!" $39.95 Sync Essentials™ Trade AccountanT™ - download program "Capture, organize and report transactions" $49.95 Simply Track - download program "Schedule D-1 Generation" $49.99 Simply Track service "They will do as a service on your data - price per account:" $49.99 NEST TMT - Schedule D Generator "NESTTM TMT: Match your trades and generate a schedule D" $85 StockTax - online usage, "StockTax does not process Wash Sales" $30 to $165 Wash Sale Schedule D Generator - downloaded program, "Generate your own Schedule D using this software" $45 & $55 Wash Sale Schedule D Generator - downloaded program, "Generate your own Schedule D using this software" $45 & $55 Portfolio Gains and Option Money - download program but needs online verification "Imports data direct from many brokers" $145 & $345 Schedule D Tools - download program "Manually enter trades throughout the year or import QIF file" $189 Track Your Trades® - download program "Enter/import trades and generate your own Schedule D / 4797" $199 CCH's GainsKeeper GainsTracker - online usage by subscription "Sells within the last 31 days view - to avoid trading into wash sales" $49 and up 20% discount offer TradeLog - downloaded program, "Including a current IRS schedule D" $95 to $345 Gain and Loss.com - full in-house service, "Including a current IRS schedule D" $34.95 to $499.95 CCH's BasisPro - online usage by subscription "BasisPro helps you quickly track and calculate cost basis" $1,000 Captools portfolio management, "Allows customized reporting" $1999.00 to $5000.00 Many on-line investors and on-line traders filing as trader status are doing their own tax returns right now. Taxpayers who qualify as a trader for tax purposes, using annually updated software, can save hundreds and even thousands in professional tax preparation fees each year. When a taxpayer is audited by the IRS, CPAs generally bill additional on an hourly basis. Having done your own return and representing yourself in front of an IRS auditor can sometimes be imposing, but if you are well prepared it can save you these professional fees as well. Optionally taxpayer who prepare their own tax returns can retain a CPA firm to represent them if the IRS auditor comes to them with questions. For most taxpayers this is the best way to go... before replying to an IRS letter or make any contact with the IRS. Fill in (form 2848 form 2848 ) as best you can and get it to your tax advisor/representative rather than communicating with the IRS directly. Audit Protection Insurance will cover some or all of the costs of CPA representation for your 2002 form 1040 using myself, or most any CPA of your choosing. This new coverage may even insure you against the taxes assessed and the interest charged as a result of the audit, and that's even if the errors were admittedly due to your own mistakes! We hope that you find using the information found on this site and our newsletter to be an invaluable starting point. Of course this information is only for discussion purposes and some of the positions discussed are sophisticated and/or aggressive. Other positions are basic and conservative. As such, taxpayers may utilize the information contained therein only at their own risk. Even though thousands of traders file on their own, we must make this statement: "All taxpayers are advised that they should not rely on the information found on this site and our email and newsletters, but should retain the guidance of appropriate competent counsel familiar with their own unique situations." Beware of the "wash sale" rule and generally of all the questionable tax advice found on the internet - such as the examples in our: Tax- advice Hall of Shame Make sure to sign up for our free email newsletter to keep yourself informed of trader status issues. Other links that may be obsolete: Exposoft TaxData Utility downloaded program, "This software helps you import trade transactions records" $12.95 More personalized, full-service trade tracking is available: Traders Administrative Services, LLC offers time- and money-saving trade tracking, capital gains calculations, and administrative services to busy trading professionals. http://tradersadministrativeservices.com
		¹ Testimony of Arthur Levitt , Chairman of the U.S. Securities and Exchange Commission Before the Senate Permanent Subcommittee on Investigations Committee on Governmental Affairs, Concerning Day Trading September 16, 1999 "Technological advances have also fostered the development of a new kind of broker-dealer. These firms promote day trading, which discards many established investing principles, such as choosing securities to buy and sell based upon company fundamentals and performance. This new trading phenomenon, while well-publicized, is relatively limited in its reach, with the number of day traders estimated to be less than 7,000. By comparison, there are close to 80 million individuals that own stock and more than 5 million investors using the Internet for brokerage services." ² A study by Jupiter Communications sees the online brokerage sector increasing assets seven fold from $415 billion at the end of 1998 to more than $3 trillion by the end of 2003. Online trading households are expected to grow from 4.3 million in 1998 to more than 20.3 million in 2003. They expect 41% of US households holding stocks to have online trading accounts in 2003. Gomez Advisors and Harris Interactive project that 2.85 million investors with offline brokerage accounts are "likely" or "extremely likely" to open an online brokerage account in the next six months. ³ Bear, Stearns & Co, analyst Amy S. Butte quoting from a newly completed report entitled "Day Trading and Beyond: A New Niche is Emerging." This report says that each day 75% of the online trading volume is done by day traders or so-called "semiprofessionals."
		Various Payroll and Tax Links for the US States Form W-2 corrections 2004 state unemployment wage bases announced: Alabama . . . . . . . . . . . . $8,000 Alaska . . . . . . . . . . . . . $27,100* Arizona . . . . . . . . . . . . . $7,000 Arkansas . . . . . . . . . . . $10,000* California . . . . . . . . . . . . $7,000 Colorado . . . . . . . . . . . . $10,000 Connecticut . . . . . . . . . $15,000 Florida . . . . . . . . . . . . . . $7,000 Illinois . . . . . . . . . . . . . .$10,000* Iowa . . . . . . . . . . . . . . . $19,700* Massachusetts . . . . . . $14,000* Michigan. . . . . . . . . . . . . $9,000 Minnesota . . . . . . . . . . .$22,000 Mississippi . . . . . .. . . . . $7,000 Missouri . . . . . . . . . . . . .$8,000* Montana. . . . . . . . . . . . $20,300* Nebraska . . . . . . . . . . . . .$7,000 New Hampshire . . . . . . . $8,000 New Jersey . . . . . . . . . . $24,300* New Mexico . . . . . . . . . $16,800* North Carolina . . . . . . . .$16,600* North Dakota . . . . . . . . .$18,500* Ohio . . . . . . . . . . . . . . . . . $9,000 Oklahoma . . . . . . . . . . . .$14,300* Oregon . . . . . . . . . . . . . .$27,000* Pennsylvania . . . . . . . . . .$8,000 Rhode Island . . . . . . . . . $14,000* South Carolina . . . . . . . . $7,000 South Dakota . . . . . . . . . $7,000 Tennessee . . . . . . . . . . . .$7,000 Texas . . . . . . . . . . . . . . . . .$9,000 Washington . . . . .. . . . . $30,200* West Virginia . . . . . . . . . $8,000 Wisconsin . . . . . . . . . . . $10,500 Wyoming . . . . . . . . . . . .$15,900* * Taxable wage base increase Click here for Salary.com's details of each State's UC taxation policies

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