this is mostly for retail guys. are you showing every trade on your sch d this year? a few trader cpa's are trying to say you need to show every trade as the irs doesn't want 1 line accounting anymore. i say tough crap it's almost impossible to show 500k trades. if it becomes a hassle i'll switch to prop and get a k-1. i know the irs doesn't want to see 500,000 trades. what are guys with llc's that have 20 traders doing 5 million trades a year doing?surely they're not showing all there trades
It would serve the IRS right if they got inundated with a few million trades. Who the heck is going to check them?
we been over this question a few times every year. search may help. i don't have half million trades,but few thousands-that's for sure. i report it in one line, using very simple math from my broker forms and annual statements. substract Pnl for year from proceeds and you got your basis cost. put all three numbers in one line on your Schedule D and you done. IRS only got proceeds number from your broker, make sure this number match. but also make sure, that you can provide info for all trades, if IRS ask for it.
Yup, I send them one line no matter what they ask for. No point in mailing them a 1000 page document that no one will take the time to add up. I got a call from the IRS once because they had a question about this, told them how I calculated the one line, and they said "oh ok, that clears it up" and that was it. (This was after the change when they asked people to no longer use a summary line)
Anyone know if there's some IRS pub. that started this whole thing? So far I've only seen advice from tax preparer services that says to report every single trade.
I ran into this with them and sent them all the trades. I haven't heard a word back from them. I think they have my file on a corner desk and threaten recalcitrant employees with having to tie out the numbers.
I agree with Bob !!!! I've been providing summary line for several years. Make sure that #'s jive with your broker's statement. If you use multiple brokers, have a single line item for each broker. I always include a cover letter note that says that individual trades can be furnished on request. All IMO, but I believe that this will suffice. Who the heck is going to sit there calculating 500,000 trade P&L's ????
For 10 years I have written in the short term Capital Gains columns "Securties Transactions" as the description. THen the Gross cost figure. Gross Sale figure. That's it. If they want the details, I'll give it to them. Date, CUSIP, order ID, all that crap. Eventually, they'll want this on disk, so their computers can crunch em. One good thing about Bush, he has kept the IRS back in the punch card era.
This issue was discussed last year: http://www.elitetrader.com/vb/showthread.php?s=&threadid=61795 Here are the IRS instructions: http://www.irs.gov/pub/irs-pdf/i1040sd.pdf Note on page D-3 that is says "Like an investor, a trader must report each sale of securities...". I used to report just a summary line with the detail being available upon request, but it is my understanding that the IRS wants the detail without having to ask for it. I have been unable to find out what the penalty is for noncompliance, so I am now supplying the detail with my return. Last year I sent the Schedule D-1 to Kinko's for two-sided printing, but this year I am planning to e-file.