Document every trade detail to the IRS?

Discussion in 'Professional Trading' started by HotTip, Mar 28, 2008.

  1. HotTip


    I usually just put a lump sum on my schedule D/4797 with a footnote saying "detailed trades available upon request", but I think I read somewhere (maybe Green Trading or something) indicating that the IRS is clamping down on traders so report all individual trades on your return. What are other traders doing? If I did this my return would be over 700 pages.
  2. jsv416


    My experience is that one must match all buys and sells and put it on the schedule D. I have always done this. There is software out there that makes it fast and easy to match, although it may require a lot of paper in your case...
  3. Not if you trade futures only. 60/40 baby.
  4. alanack


    There are programs that will take the data(your trades) from your brokerage firm and automatically generate Schedule D-1s from it. Check with your broker for third party accounting tools to see which ones they support. Also, you could ask the IRS if they would accept the documentation on removable media, and if so, in what format.
  5. HotTip


    I'm not concerned about generating the documentation, as I already have the software. My question is that does it benefit me at all to submit that stack of paper to the IRS, because it'll be a MASSIVE return.
  6. It is a huge waste of trees really but can't you e-file your return? I thought most CPAs are going all electronic these days.
  7. I have H&R working on mine as we speak. I started trading in Dec. '07 and ended up with over 400 trades last year. It's been a nightmare for H&R, though. A lot of forms needed aren't in H&R's system. Hell, some documentation that needs submitted is a handwritten letter, there is no form available from IRS.

    I'm not sure if he was able to put my trades on Part II of Form 4797 or whether he had to put them on Schedule D.

    I'll let you know more when I pick up my taxes today.

    Anyway, here's how complicated taxes are for active stock traders:
  8. sprstpd


    Last time I checked (several years ago), I couldn't e-file precisely because I had too many trades. You figure that would be the perfect case for e-filing but nope. I don't know the restrictions on e-filing now though. Maybe I will try this year.
  9. HotTip


    I have about 7300 trades for the year, but I'm sure that's nothing compared to some of the day traders out there. Can any of the active daytraders comment on my OP? Do you include every trade detail in your schedule D/4797, or just the summary info?
  10. what is the limit on the amount of trades you can e-file with TurboTax
    #10     Mar 28, 2008