Switching brokers in 2013, and need advice for tax purposes.

Discussion in 'Retail Brokers' started by Froglet, Oct 23, 2012.

  1. Froglet



    I currently have a passive margin trading account w/ a brokerage firm. But because of their platform, I'm unable to trade frequently. Their platform just doesn't support such functions.

    Net all, this account is more of an investment account than trading account.

    Since 2013 is around the corner, I'm planning on setting up another trading account w/ another brokerage firm.

    My question is, would it be better for me to transfer everything to this new brokerage firm, or find new start up capital? What tax implications would I have to be concerned about with 2 brokers? I have 4 stocks in this account as L/T investments and have been buying shares every 2 weeks or so. They are all in a DRIPs program as well.

    Since I use Turbo Tax, I am concerned about Turbo Tax's ability to handle uploads.

    Any ideas?

  2. Froglet


    Any bump?? Help?

  3. Personally, I have no knowledge of TurboTax or any DIY tax software.

    Based on the current taxcode, it should be simpler for you at tax time if you maintain separate accounts (for equities and equivalent tax treatment instruments, not including retirement accounts)... one for long-term holdings (1 year and a day) and one for short term holdings (less than 1 year and a day, to include wash sales).

    But it's only the end of October 2012!! At best, all we can do is speculate on how the 2013 taxcode will differ. :(
  4. Transferring accounts that include securities can lead to occasional delays and mixups, but if you need to avoid tax consequences of liquidating and repurchasing, it may be the simplest thing in the long run since you are more of an investor.

    Do you really want the hassles of having 2 accounts at different brokers forever?

    First make sure that the new broker will accept every single security that you now own.

    In the short run, probably the basis will get mixed up and tax filing will be a burden for the year, but at least the correct tax treatment is clear, and once you do get it all sorted out, you will be in better shape for later years.