by Joey Dixon - August 13, 2008
Before we get into this discussion, we want to address the need to think logically when you're setting up an account in TradeLog. Some users think that since they understand computers and software they don't have to read instructions. Of course, this is not the case, and this type of thinking causes much time to be wasted.
Open positions from last year
One aspect to consider is how you trade. If you carried hundreds of open
positions into the tax year you're filing, it's definitely going to take you
more than 15 minutes to complete your tax forms. Why? Because your online broker does not make it easy for you to
gather your open positions.
Please read our Gathering Baseline Positions - Open Positions from Last Year tax topic.
In addition to entering your open positions going into the tax year, you also need to verify your open positions at the end of the tax year in order to make sure that everything is matched properly. Skip this step and you may never know that anything is wrong.
FIFO trade Matching rules
If you abandon the FIFO (First In, First Out) method of matching trades, then you
will have to manually identify which trades are to be matched. This is not easy. Your broker
does not match trades nor do they provide any information on how trades should be matched.
You also may have to identify trades that have been separated into
partial fills. This can be a nightmare with hundreds of trades or thousands
of trade records.
Now, well move on to the real issues that effect most users.
Negative shares error
The most common TradeLog error is the dreaded negative shares error. This
error prompts users to view trades that are missing an open position or where the trade shows
more shares closed than previously opened, hence the term "negative
shares." In most cases, this error appears because open positions from the
previous tax year were not entered correctly, or not entered at all.
For example, lets' say your trade history shows a sale of 100 shares on Jan 3, but there is no buy record included in the import. TradeLog raises a negative shares error on this trade. If this trade was not a short sale, then the 100 shares must have been purchased in a previous year and needs to be manually entered. Another possibility is that this sale was not flagged as short by your broker and needs to be changed to an open short in TradeLog.
Another example is if your trade history shows a buy of 100 shares on Jan 3 and a sale of 200 shares on Jan 10. This also raises a negative shares error as you have sold more shares than you bought. Again the other 100 shares may have been purchased last year and needs to be manually entered.
Other reasons include corporate actions, such as stock splits or spin-offs, that weren't properly adjusted by the broker. This may have sparked a name or share count change. Fortunately, TradeLog includes several powerful functions to make such adjustments, and unlike some of our competitors, allows you to make sure these were done right!
Brokerage errors
Still, some brokers simply make mistakes in their trade history files, and therefore
corrections need to be made in TradeLog. Whatever the reason, be prepared to research what happened in the security
in question so that you don't spend hours playing with the functions in TradeLog,
as this only exacerbates the problem.
Trades reported out of order
Some brokers report trades out of the exact order that they were
executed. Matching such trades becomes more difficult when a timestamp is
not provided. Further problems occur if the timestamp is wrong. These trades
now have to be identified and manually matched so that a proper P/L can be
calculated. This problem can be very time consuming to fix and is best done by
importing regularly throughout the tax year, fixing trades out of order as they occur,
and not waiting till year end.
15 minute challenge
The above problems do not completely dismiss the 15 minute challenge. We can help you
master the
various features and functions of TradeLog so you can get your taxes filed in the shortest
time possible.
Our goal is to teach
you how to use TradeLog
effectively. Once taught, many of our users are amazed at how fast they can fix problems, such as expiring
hundreds of option trades in seconds, isolating a single ticker for analysis, printing and sending
out a completed schedule d, etc.
Though this tax season was very busy, it was another successful tax season. And so we encourage all of you learn how to use TradeLog effectively and keep your data files up to date during this new tax year, so that you can be one of the thousands who simply hit the print button when the tax year is over.
But please remember that our support team is always there to help. Let's see if we can get you up and running within 15 minutes!