I keep track of my individual trades on an Excel spreadsheet. But let's say you don't do that. If you just use IB's reported transactions, your Schedule D totals will still tie to broker reported 1099 proceeds and this wouldn't give the IRS a basis to question your return. If they did wade into the details (say from your daily account statements), they would find that your summarized transactions still gave the correct figures and your total tax bill wouldn't change. What I'm really trying to say is that practicality sometimes needs to supercede strict adherance to the law.
This information is available. Under Report Management, you can select - Activity Downloads which list each and every trade.
I'm not a licensed tax guy and this isn't advice. This is only how I understand it when it comes to trading: Most expenses are considered to be hobby expenses unless traded as a business. There are up to 50 expenses that a "business designated" trader can write off... things like data feed to your puter... cable tv.... power supply for puter... ------------------------------------------------- The more successful an individual is, the higher the tax bracket goes up. A trader's largest expenses are taxes, whether you LOSE or make money. A person trading as an individual, (which is classified by the IRS as an INVESTOR) without business designation is subject to the $3000 capital loss rule, meaning, if you lose say, $23,000 you can only write off $3000. The INVESTOR classification is also subject to wash sales, meaning, if you buy and sell a stock for a loss, you cannot claim that loss if you buy that stock (or derivative) back within 30 days. SO, the wonderful $3000 rule doesn't even kick in until all wash sales are calculated. So you can have $23,000 in wash sale losses and actually end up owing Uncle SCAM. In addition, as an INVESTOR classification, margin expenses can only be deducted if the trades that require margin make money. Last writeoffs for INVESTORS are troublesome with the exception of kids, mortgages and charity because the IRS looks at many INVESTOR expenses as hobby expenses. Even with the allowable write offs, the investor is subject to a 2% threshold, meaning, if s/he had say, $100,000 in income, the 1st $2000 cannot be written off... medical expenses have an amazing 7.5% threshold!! NOW the other plain vanilla designation allowed by Uncle Scam is to be designated as a business entity which includes.......(drum roll please)..... TRADER in SECURITIES election or a formal business structure such as a pass through entity which is an LLC or LP. Or a C Corp, which in my opinion is the top dog,,,if you have money. An S Corp shouldn't be considered here because an S corp has to designate 50% income to payroll. Back in the 19teens the rich learned to use corporations to their advantage to reduce their taxes by increasing financial flexibility. Trading with a business election allows the trader to write off EVERYTHING from dime one. C Corp filing allows for extreme flexibility but has some hoops. As in, the first $50,000 is taxed at 15%. Shares in a C corp can be distributed amongst family members whereas they will get taxed on the small portion they own. Delaware and Nevada are the top two states to inc. or LLC in for privacy benefits. Nevada was best, now it's Delaware... Now I'm sure I'll see the double taxation argument and others but the bottom line is that EVERYONE is an individual who has their own 'thing' going on which basically equates to, research, and placing yourself within the structure that best suits you. Disclaimer: I'm not a tax guy and anything you just read by me is a good as craziness if you believe it.