Elegant Schedule D--managed acct on 1 line OK?

Discussion in 'Professional Trading' started by trelaine, Feb 13, 2013.

  1. trelaine


    Hello all, my first post. I hope this is the appropriate forum...

    I have a daytrader account as well as two manager-traded SmithBarney accounts. The daytrader account has maybe 10k trades/year, while the manager-traded accounts have just 100 trades/year. In the past, we have used HR Block, and they entered the net profits, proceeds from sales etc. of each pro-traded accounts on one line of Schedule D, rather than individually list the 100 trades. They used the rest of Schedule D to individually list the daytrader account trades, as shown:


    As the daytrader trade list is a huge file, we have started using Green and TradeLog software to generate a schedule D for the 10k daytraded account.

    I am told by our new accountant that we need to combine a listing of each of the 100 SmithBarney managed account trades with the 10,000 daytrader account trades, in one schedule D, rather than the simple elegant way of the past.

    My guess is this is to detect wash sales. But the managed account trading was done completely independently of the daytraded account. As a result, if the same security were traded in both accounts, this would be a pure coincidence, rather than something the wash sale rule was meant to address. Trades in the same stock in both the daytraded and SmithBarney managed accounts would be just as unrelated as between the daytraded account and a mutual fund, or an unrelated person's trades.

    Was HR block correct, i.e. is it OK for the managed account to list the net proceeds and net gain/loss on a single Schedule D line? Or do i need to blend in TradeLog a list of all 100 trades done by the unrelated managed account, with my 10,000 daytrades account? This is a real pain, to get the SmithBarney trade data, upload to Green, and have them combine it with my completely unrelated trade data. This will cost another few hours of expensive accounting time. It also makes it harder to isolate the results of the two accounts.

    Is the reason for this added complication to detect wash sales? Or what?

    The IRS hasn't protested the one-line managed-account net proceeds, costs and gain/loss method in past years, although granted, that doesn't imply it's OK.

    Thanks for any comments!
  2. Whether "managed" or not is irrelevant legally - the accounts are both in your name.

    You should

    - merge the transactions detail to look for any capital gains and wash trading implications and also .
    - provide a detailed list of all transactions.

    You are certainly not allowed to ignore wash-trading incidences just because one side was managed.

    The fact that the IRS did not audit you in the past means nothing.
  3. Bob111


    i didn't read the whole thing,but i do file in one line for a very long time. few things from other fellow ET members and my experience:
    any retail soft is not going to allow you to enter sum of all basis or total sales if the number is >10M.(see my posts from like year ago regarding taxes). how you are going to enter that-i don't know.
    i go to my friendly CPA and he just re type all the numbers from taxes prepared by me at home into his "pro' application :)

    #2-if you still filing in one line-attach first 5 and last five pages of your sch d worksheet along with letter saying-i will provide all pages upon request. keep in mind that filing this way is technically not allowed by irs code
  4. This was done in the past but the explicit instructions of the IRS now say:


    Form 8949 instructions page 2:

    "Do not enter 'available upon request' and summary totals in lieu of reporting the details of each transaction on Part I or II or attached statements."
  5. Bob111


    aren't those instructions was there all the time? or it's added for 2012 and beyond? if so- then i got my new cartridge right next to me..you want dig thru my 25k+ transactions?(many of them those famous 1-2 share lots..not a problem. knock yourself out over it..

    PS-like i said-submit first few pages and last few pages. what they are saying is: don't just put everything in one line without any proof.
    at least this is how i see it. what is the point or difference to go from page 1 to 670 or from page 1 to10 and then from 650 to 670?
    all pages are numbered, all numbers are suppose to match with other forms and on top of that-they will have same exact numbers from our broker. not just gross sales, as it was before but all of them,basis included.
  6. They added them a few years ago (2010?).

    I think that your solution is a good one as a practical matter. Including the first 5 and last 5 pages seems like a good practical compromise.

    I was just noting that the IRS has addressed the issue in the instructions for those who want to see their wording.

    I think that the original poster's major issue is whether he can ignore wash-trading that occurs across different accounts (one managed, one not). I believe he cannot ignore it in general. After all, the IRS wants to even look for wash trades between an IRA and a non-IRA personal account.

    On the other hand, if the tax payable does not change if all transactions are combined for wash trades and other capital gains, then I think he could probably get away with tallying them separately, again as a practical matter.

    Or, tally the two accounts separately and then add an adjustment line to account for any changes that occur when they are combined. I think that is what I would do. It will show that you care about accuracy. The IRS will not not what to make of it but will not care either if the adjustment is minor. The whole issue of the detailed reporting is chaos anyway.
  7. Bob111


    --I think that the original poster's major issue is whether he can ignore wash-trading that occurs across different accounts (one managed, one not). I believe he cannot ignore it in general. After all, the IRS wants to even look for wash trades between an IRA and a non-IRA personal account.---

    like i said- i didn't read the whole thing,but if that's the case-yes, totally agree. you can't go around it. i mean..you can try whatever,but make sure you know the consequences :)