Brokerage Online Trade History Reports
In addition to providing a Form 1099 at the end of each tax year, most online brokers provide some
type of trade history report. This can be in the form of a daily, monthly,
or yearly statement which includes a list of trades executed during that
period. Reports may also be available that list trades executed during a
specific range of dates.
However, you will inevitably find that there are absolutely no clear,
consistent standards for broker trade history reporting...even within the
same brokerage firm. One broker report will identify an equity or option
traded in your account by ticker symbol, while another will give a long
description. This lack of consistency in reporting can make proper trade
matching a challenge.
Here are some of the inconsistencies:
Stocks
- Ticker Symbols - Most brokers use ticker symbols to report stock
transactions. Others use stock descriptions. And when they do, these
descriptions can vary quite a bit from one broker to the next. Even
simple things such as reporting buys and sells and short sales are not the
same across brokerages.
- Buy/Sell codes - Some use the terms buy or sell, bought or sold,
purchase or sale, sell short, sold short, and the list goes on and on. Some
simply report the shares sold as negative and the shares bought as positive.
- Short Sales - Some flag when a stock is sold short, and when a
buy covers the short. Many do not, simply listing the trade as a buy
or sell. Some report the short sale but provide absolutely no
indication that a buy is to cover the short or to go long.
- Trade Date - Most brokers use trade dates in their reports, a few use
settlement dates only.
- Time of Day - Some include time of day, many do not.
To further complicate matters, a few brokers who do not provide a time of
day stamp, occasionally report trades out of order for trades made on the
same day. So a buy to cover can end up being reported BEFORE the short sale
that it closes. Huh?
- Share Price - Some brokers round share price to the nearest penny,
while others show the full decimal price actually paid (ie: $0.0275 per share
becomes $0.03 which overstates the amount)
- Commissions and SEC Fees - Most brokers report the commissions
and SEC fees per trade, with a few reporting these in separate columns.
Others simply report a total amount that includes commissions and fees.
Still others leave off this critical and necessary information. This
information is important because commissions
and SEC fees should either get added to the cost basis, or subtracted from the sales amount
for all completed trades reported on schedule d.
Options
It is even worse when it comes to reporting option trades. Many brokers report options using option ticker symbols, which are reusable
from one year to the next, or which mean something totally different from one
year to the next.
- Option Ticker Symbols use alphabetic characters to describe the
expiration month and whether it is a put or a
call but this provides no indication of the expiration year.
- Alphabetic characters are also used for the strike price but the
same character can represent several different strike prices
(ie: A = $5, $105, $205, or $305).
- The first 2 to 4 characters of the option ticker symbol represent
the underlying security, but in many cases these do not match the stock
ticker symbol.
(ie: DELL options = DLQ, DLY, DLK, etc.)
- Some brokers provide this necessary information such as the proper expiration month and year, the
correct strike price, and the underlying stock ticker, while others
provide only part of the information or use a partial stock description.
Substantially Identical Securities
Since the IRS requires that wash sales be calculated between stocks and options, which
according to the IRS are
"substantially identical", it is essential that there
be some way of identifying that an option is related to a specific stock. What
is required is a standard notation such as "DELL DEC06 40 CALL" which provides
everything you need for tax purposes.
How can anyone possibly make sense of
such inadequate reporting? I don't have to tell you that doing all
this manually is quite complicated and very time consuming. Many
accountants have been known to charge hundreds or even thousands of dollars to
properly match one's trades!
Here is a major benefit of using our TradeLog™ software:
TradeLog imports direct from your broker provided trade history report and
reformats all of the data in a consistent format across all brokerages.
In addition, any broker specific anomalies such as described above are handled simply and
easily by our custom import filters. - We do the heavy lifting for you!
This is not a simple "one size fits all" approach to importing
trade data. We take the data as presented by your broker, and do
whatever is necessary in our software to straighten out that data so it
is consistent, and so that it can easily be imported and matched.
Learn about...Baseline Positions
Please note: This information is provided only as a general guide and is not to be taken as official IRS instructions. Armen Computing Ltd. does not make investment recommendations nor provide financial, tax or legal advice. You are solely responsible for your investment and tax reporting decisions. Please consult your tax advisor or accountant to discuss your specific situation.
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