Do not use tradelog for your taxes

Discussion in 'Taxes and Accounting' started by RiceRocket, Mar 23, 2007.

  1. They don't. Neither does H&R Block's TaxCut. If you want to account for wash sales correctly when using these two programs, you have to figure out the wash sale basis transfers manually and type all of these into your return manually. It is a huge pain in the ass. I've used Trade Log for this purpose. It rocks. I wish they had a Mac version so I could run it at home.
     
    #21     Apr 1, 2007
  2. hughb

    hughb

    JESUS H CHRIST!!! How the frick can somebody put together tax software that DOESN'T calculate wash sales!! That's absurd!!! The free version of GainsKeeper that I get on my broker's website calculates wash sales, but TurboTax doesn't?
     
    #22     Apr 1, 2007
  3. Monteagle

    Monteagle

    Mon 2007-04-02

    A friend sent me a link to this forum topic as a chuckle. I chuckled but I had to join this forum to speak directly regarding this particular thread. By way of introduction, I am retired, which affords me the ability to sleep 45 hours a week now, instead of the 28 hours per week that I enjoyed for 45 years or so. I've had a long and varied career, always self-employed, but among other things, I was a limited partner in a firm with seats on the CBOT and the CME. I still trade but not full-time.


    Trade Accounting Software

    I occasionally do support work for a firm which specializes in taxation of hedge funds and traders. I may get involved with clients with more than 40,000 transactions per year, or those with peculiar trading strategies or trading oddball derivatives of various sorts. I never see accounts that work out correctly on the first pass -- only those that present problems -- basically those that represent the toughest challenge for trade-accounting software.

    Traders with high volumes are encouraged to use Trade Depot, which for the Wash Sale version, starts at $1500 with a $500 per year maintenance fee, plus at least one part-time bookkeeper or service (starting at about $300 per month). Some high-volume traders use TradeLog successfully but it presents problems when volume goes above 30,000 transactions/annum. High-volume traders, on price alone, stay clear of GainsKeeper.

    I have a major problem with GainsKeeper in that there is no way to determine what it did nor how it did it. It is simply a black box which spits out a good-looking report. Unless the taxpayer signs a waiver of responsibility, a tax firm would best avoid using a GainsKeeper report for a tax return. Does that say something meaningful to you?

    If you rely on any tax report furnished by your broker, you are making a mistake. If any broker can demonstrate consistently correct results, we have not yet seen it. The situation is much worse than you might imagine -- we have yet to see even one of these reports which was correct. This firm has nearly 2,000 clients, so what are the odds that yours happens to be correct?

    TradeLog has deficiencies. Trade Depot has deficiencies. With Trade Depot, after paying $1,500 to buy the small wash-sale version, you will spend about $4,100/a to run it. So TradeLog looks like quite a bargain, on price alone. I can say without equivocation that for the smaller trader, TradeLog is by far your best and cheapest option, all things considered -- your tax bill, your time, and the cost of TradeLog versus anything else.

    I have spoken with Dave Eich a few times concerning some issue and he has been courteous and forthright. And on a couple of those occasions, he must have stayed up all night because the very next morning, a new version was available.

    Perhaps he does not help you if you are not a current paying customer, but if so, can you blame him? Do you talk to your doctor for free? Do you talk to your lawyer for free? Do you talk to your accountant for free? Have you ever tried talking to GainsKeeper? (ho-ho-ho)

    Software exists for different purposes, and I agree that in certain cases, you probably do not need the latest version. Take Microsoft Office -- I paid about $300 for it in 1995, again in 1997, again in 2000, and yet again in 2003. I use Word a bit, Access a bit more, and Excel constantly, but since 1995 they have not introduced a single new feature that I use. In fact, feature-wise, I could still be using WordPerfect and Quattro Pro from 1987. And I paid Microsoft $450 for NT3.5 and $350 for the upgrade to NT4.0 and $900 total for Win2kPro on 3 computers, and $1,420 total for XP Pro on 5 computers plus $1,100 for WinServer2003 for the 110-pound chunk of hardware on the floor here. I don't even want to add it up.

    But do you suppose Microsoft will give me free support? No sir, 85 bucks an hour. (Though I no longer call them because my experience back in the 80's was that I knew more than the drudge I got on the phone.) The point is this -- I spent all that money on software that basically does the same dang thing it did 20 years ago. I have seen no noticeable improvement whatsoever. I could load up 20-year-old software and crank out the same result (presuming it could function on this computer, which it could not).

    Trade accounting software is not like that. If Ray at Trade Depot and Dave at TradeLog weren't constantly keeping up with changes, the software would be inoperable or at best, produce incorrect results. So the idea of using an older version seems odd to me. Trade accounting software is TAX software. Would you use TurboTax 97 year after year? Do you expect Intuit to provide assistance doing 2006 taxes when you last bought the software for Tax Year 2005? That sort of thinking puzzles me.


    Taxation

    Up until 1974, I was doing my own taxes, getting hints at parties from nearby tax accountants and tax lawyers. That year a friend of mine, with 10 times as much money as I (this tends to make me listen), said "Are you nuts?!!!! Go see these people!" and he pulled his accountants' card from his wallet. A fully loaded Cadillac could be had in that year for $3,700, and your best deal now for a comparable is about $42,000. That gives you an idea of the value of money, then and now.

    Those accountants gave me a bill for $3,200. Seemed like a lot. But wait! They saved me, in one year, $9,200! I was $6,000 to the good. They bought me a Volvo 164 (priced out same as the Caddy) and a full-size van ($1,850), plus Surf-n-Turf for two every Saturday night for a year. And I didn't spend 40 hours agonizing over an inch-thick tax return, or worrying about that October 15 deadline coming up. (Filing before April 15? Why not just call and request an audit?)

    If you are a trader and you have a regular accountant doing your taxes, you might want to re-think this issue. I personally see traders save $10k, $50k, $200k/a in taxes by switching to accountants who do nothing but trader taxation. Savings of 10% to 20% are common, but I've seen much more than that. Unfortunately, I've also seen traders sue their former accountants, and I don't really think that is fair. If you're a trader, aren't you supposed to have better sense than to use a general practice accountant? Disclaimer: results vary, yada, yada, yada.

    Trader taxation is an unnecessarily complicated field, and it's not your accountants' fault. Heart surgery is complicated, and it's not your family doctor's fault -- but would you have him operate on your heart?

    As regards tax software, I have a nodding acquaintance with the following: Fast-Tax (~$2,400/user/a), Lacerte (~$1,600/user/a), and CCH (~$1,800/user/a). These are tax-preparation applications used by professionals. They go way beyond TurboTax. None of them computes wash sales. None of them automatically computes any of the specialized needs of traders or hedge funds. That's why there are trader tax specialists. And that's why there is Trade Depot, and TradeLog, and <cough> several others.

    One final thing. I have heard traders say "I lost money last year so I <don't need>/<can't afford> my tax accountant this year." Keep that three-year-old car another year. Pay your accountant.


    Full Disclosure

    I love tax accountants who specialize in trader taxation. I love them so much, I married one, and believe me, I hear all the stories, and that's how I got roped into helping out. She spends about 400 hours a year just keeping up with changes in rules and regulations. This time of year she is computing taxes to file extensions -- usually at work at 0400h and quitting when I drag her away at 1940h -- 7 days a week -- that's about 110 hours per week. Then until October 15 she finalizes tax returns, working only 70 hours per week -- a veritable cakewalk. She lives and breathes trader taxation. (Does your accountant work that hard? Does he even care?) I know it's hard to figure but she ENJOYS this. Luckily, her office is here at home and she's rarely more than 90 feet away.
     
    #23     Apr 2, 2007
    Atem likes this.
  4. john12

    john12

    to the above note. i trade around 300k times a year and use one if not the best trader accountant in america and to use anything like tradelog or gainskeeper is stupid and unneeded. the wash run sales is bs if one closes all positons at year end. 1 line accounting is all thats needed for a full time heavy trader. most brokers like tos or ameritrade provide free gainskeeper if you need to download your trades.don't let these software vendors scare you into buying there wares
     
    #24     Apr 2, 2007
    j law likes this.
  5. vikana

    vikana Moderator

    I have used TradeLog for about 4 years and generally found David Eich to be responsive and fast at addressing changes in format, bugs, etc.

    One thing has changed: David must have hired someone to do his support. My last few interactions with support for the first time made me think about looking at other software. The responses were arrogant and he/she basically "did not want to deal with the issue" I was having. After a lot of back and forth, I was asked to submit an enhancement request, which I did. Within minutes i got an email back (from the same support person!) saying NO to the request. That's pretty poor, imo.
     
    #25     Apr 2, 2007
  6. i agree . i asked tradelog to change some things and they were rude as hell to me and also told me no.david you need to be nice to your customers who put food on your table. you got a good product but the way you treat people is driving people away
     
    #26     Apr 2, 2007
  7. tradelog

    tradelog

    We have users who are being audited for exactly that practise. You can file your taxes any way you like and ignore any of the tax rules and it is OK, until you get audited.

    If you have not elected Mark to Market then you must report wash sales. Even if all your positions are closed at year end, if you sell a stock or option at a loss and in December and then buy it back within 30 days in January then that loss is disallowed for that tax year and must be deferred. Anyone who tells you differently is not much of an accountant.

    PS: You need to be very careful about giving tax advise that clearly ignores IRS tax laws, and the wash sale rule is part of that law, like it or not.
     
    #27     Apr 2, 2007
  8. tradelog

    tradelog

    I wish our users would have the courage to complain to me rather than to the world if they feel they are not getting the support they have been accustomed to receiving from our company. We get very few such complaints.

    We are growing rapidly and out of necessity are having to add support staff, and sometimes that creates problems. But we still listen to our customers.

    Please understand that our primary concern during tax season is helping our users to get their trader taxes filed on time! Also please understand that many procrastinators who only now are trying to reconcile their 2006 trades have short fuses when asking for support.

    So sometimes requests for non tax related enhancements are not given priority during this critical time period. But that does not mean that we do not listen.

    I suspect that is why no one else has any phone support. Maybe we should join the pack and reduce our price to the sub $100 price range and offer little or no support like the rest? I could simply have an email autoresponder reply to every support request to read the online manual and tutorial.

    Then during tax season, I will have no employees to worry about and I and my wife can be lounging on the beach in Costa Rica. We could be true internet entrepreneurs.

    If I spend any more time in this forum, I think this alternative will begin to look better and better to me. But I don't think that most of our customers would appreciate this.
     
    #28     Apr 2, 2007
  9. hustler

    hustler

    Complaining publicly is the most effective way of complaining. And a surefire way to get the sought after response.

    Complaining directly and silently to some employee at some company most often only ends up in the trash bin or possibly laughed over on the coffee break. :D
     
    #29     Apr 3, 2007
  10. use gainskeeper.
     
    #30     Apr 3, 2007