Should be fairly self-explanatory. The specific instructions for column (d) of Sch D appear below. In short, adjust your cost (or other) basis (column (e)) in order to arrive at the exact gain(loss); don't adjust the gross proceeds shown on your 1099-B. "Column (d)âSales Price Enter in this column either the gross sales price or the net sales price from the sale. If you sold stocks or bonds and you received a Form 1099-B (or substitute statement) from your broker that shows gross sales price, enter that amount in column (d). But if Form 1099-B (or substitute statement) indicates that gross proceeds minus commissions and option premiums were reported to the IRS, enter that net amount in column (d). If you enter the net amount in column (d), do not include the commissions and option premiums from the sale in column (e)."
Still, it's non-trivial to do this. Like most people, my trade spreadsheet includes commissions on both buys and sells in calculating its totals. My "handle" for last year was over $55M, in about 6000 trades. Just getting a 1099 figure to balance against this is difficult enough, without having to modify the spreadsheet solely for the purpose of balancing to their "book-keeping variation". Not to mention the non-inclusion of option transactions.
I also thought the IB system was wrong until I copied the monthly emails into Excel. At that point all you have to do is sum the sales column. It matches the 1099 exactly (except for options). Next sum the buy column and the commision column (change the commision sign from negative to plus), add these two columns and you have your basis. If you mark to market (and flat at the end of the year), you're done.
If you are making 1000 trades a year at 15 bucks a pop the least the brokers can do is provide you with an accurate trade by trade summary that can be used as is for taxes. You are giving then business and thats what they should provide. To have to manipulate your trade by trade just so the 1099's can agree is garbage. With every other broker I was able to cut and paste into excel and be done in 10 minutes. IB prep took me much longer(far fewer trades too) and required some manipulating.
On the 1099-B, the IRS gives the brokers the option of reporting the sales with or without commissions. The IRS requires the broker to indicate whether the gross proceeds or gross proceeds less commissions and option premiums were reported to the IRS. The brokers only report the sales transaction to the IRS. I never look at my 1099-B forms and consider the daily trade confirmations to be my best record. I import the daily confirmations into my accounting software and balance all accounts each day to catch any possible broker errors. For my schedule D, the software combines all my trades from all brokers and prints out the schedule D with a click of a mouse. Catoosa
Catoosa, What accounting software do you use? I really need to develop a better system to track trading/accounting on a daily or at least weekly basis because I am really lacking in the up to date accounting department. Do most traders here use excel or quicken. One problem I have with any broker is their statements report many partial fills, like selling 100 shares and you get 5 different lines of 200 shares each. Do you convert that manually each time? Getting taxes together is very unpleasant for me and I would like to make it easier. Thanks
ron2368: I use Captools global Investor. It will handle odd lots and partials as easy as round lots. I think a lot of traders are using tradelog software: However, the current version of Tradelog (based on reading the information on Tradelog's webb page) is only a trade matching software and does not handel cash, interest, dividends, etc. Captools does it all with about 75 different types of transaction codes. You can read more on Captools at Captools.com. Catoosa
I use Quicken to keep track of all trades. With IB it's as simple as downloading you transaction file once a day. I also track everything in Excel. That's how I monitor fills vs system prices etc. I haven't found any software that will allow me to track slippage etc. all of which is important to understand
I complained about IB's gross reporting without commission last year. It is not a big deal unless you have to change all the entries manually in Quicken and you made more than handle of trades and you daytrade. It was rather unpleasant. I spent 4 times the amount of time on IB than the other brokers. If you daytrade, Quicken doesn't handle short and long the same stocks multiple times a day that well. For some reasons, it doesn't keep track of the order of execution(The grand total is right but you get -ve dollar minus -ve dollar and a wrong match).. It took me another day to clean up those -ve numbers.. Then, Quicken to Turbtax can screw it up again for you so I spent another day to double check the Turbotax entries. Also, IRS does its first round of simple checking through computer. If I were you, I would make sure my schedule D amounts match with the 1099s. I don't want my form being spit out just because of the tiny commission mismatch.