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End Tax Year - Cash Basis Accounting

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Please review the Quick Start Guide to confirm that all necessary trade data has been imported for the particular tax year, prior to running the End Tax Year function in a data file.

 

Please review   Lesson 12 - Ending the Tax Year in our Online Tutorial for a demonstration of this procedure .

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Close the books for the current tax year and create necessary adjustments for next year:

 

Click here for Mark-to-Market Accounting procedures.

 

If you have multiple accounts, please combine them first using File, Combine.

 

TradeLog® provides an End Tax Year procedure that performs the following accounting functions:

  • Creates a data file for the next tax year with the same name as the current tax year data file. For example, "2006 Schwab.tdf" would generate a file for the following year named "2007 Schwab.tdf".

  • Copies all year end open positions from the current year data file to the next year data file.

  • Copies all January trades from the following year into the next tax year data file.

  • Generates wash sales and copies any wash sale deferrals to the next tax year data file.

 

The following procedure outlines how to run the End Tax Year function in a data file, generate the appropriate Gains and Losses reports and prepare your IRS Schedule D for filing.

  1. Click File, End Tax Year.

     

  2. A popup window will ask:

    Are all of your trades imported for January of next tax year?

    These trades are necessary for TradeLog® to properly calculate wash sales for the current tax year.

     

    If your January of next year trades have been imported, answer YES to continue.

     

    If your January of next year trades have not been imported, please answer NO to this question, import them from your online broker, and start all over again.

     

  3. A popup window will confirm that your next year data file has been prepared, and provide the name of the file. All necessary entries are recorded in the next year data file: open positions priced to year-end prices, all January trades, and any wash sale deferrals.

     

  4. You may now run the Gains and Losses report. Click Reports, Gains and Losses. TradeLog users should check the Adjust for Wash Sales box prior to running the report. Run one report for Short-Term and another for Long-Term as these are recorded in separate sections on the IRS Schedule D.

     

  5. Print your short-term and long-term Gains and Losses reports. You are now ready to copy the report data to your IRS Schedule D.

     

  6. On the IRS Schedule D, write "See attached report" on Part I, Line 1 and on Part II, Line 8.

     

  7. Copy the short-term totals for columns (d), (e) and (f) on your short-term Gains and Losses report to the IRS Schedule D - Part I, columns (d), (e) and (f).

     

  8. Copy the long-term totals for columns (d), (e) and (f) on your long-term Gains and Losses report to the IRS Schedule D - Part II, columns (d), (e) and (f).

     

  9. Follow this procedure for each data file created for the tax year you are working on.

     

  10. Attach all short- and long-term Gains and Losses reports to your Schedule D for filing.

     

  11. You are now ready to work on your data file for the following tax year. Click File, Open to navigate to and open the next tax year data file that was automatically created during the End Tax Year process. You may begin importing your trades from February 1 of the next tax year onward.