FAQ |Form 8949 Capital Gain & Wash Sales calculator software

Does your software handle splits and reverse splits on opitons?


Q:Does your software handle splits and reverse splits, including dealing with options whose underlying has split/reverse split on opitons?

A:TradeMax can handle splits and reverse splits events including dealing with options.
http://www.itrademax.com/ipress/detailed-instructions/adjust-trades/split-trades.htm

TradeMax will auto assigned / exercised option to stock after split / reserve split event.(even the strike price or quantity will change)

In the following case,URE has a split(1 for 5) event on 04/15/2010,TradeMax will automatch the PUT Option URC100417p00009000 assigned strike price from $9 to $45,qty from 20 to 4,On gain&loss report our software will defer split option’s cost to correct underlying stock.

stock options split  match

If you enabled warning message on “Auto Assigned / Exercised Option to Stock after Split / Reserve Split Event” function in options TradeMax will give you a warning on such case

When I try to install Trademax,it asks me for an email address and will not let me proceed without entering my email address


Q:When I try to install TradeMax,it asks me for an email address and will not let me proceed without entering my email address.Do you know how I can solve this problem?

A:You can input your email address as indicated in the following screen-shot

Does your software automatically adjusted the basis of stock trades when options are exercised/assigned.


Our software checks the option transaction and its strike price. If there is an option exercised/assigned and the underlying stock has buy/sell actions on the same day, the strike price matches stock purchase price, and quality matches, plus, there is no commission fee charged on stock transaction and option transaction, TradeMax will recognize it as option assigned/exercised. TradeMax will  also adjust the option cost into the underlying stock cost basis.

In some cases,when the broker’s stock purchase dates are not the same as option exercised dates,TradeMax will not adjust the cost basis to stock.

—————example————————————————–
2393    CHLN    Stock    1:1            CHLN        11/20/2009 Long   YQO-KZ exercised @ 11/20/2009    1000    $2.50    $2.50    $2.50    $0.00        $0.00    $-2500.00    $-2500.00
2390    YQO-KZ    STK Call Option    1:100       11/21/2009
Exercised    YQO-KZ exercised @ 11/20/2009    10
———————————————————————–
You should adjust option Exercised  day to 11/20/2009

Does TradeMax support option assigned/exercised cost calculation?


Does TradeMax support option assigned/exercised cost calculation?

Q:Does TradeMax support option assigned/exercised cost calculation?

A:We can ensure you our software handles it. If option is assigned or exercised, our software will automatically adjust the cost. The option which is assigned or exercised will not trigger any immediate realized gain or loss on our report. However, when TradeMax generate report, your relevant option/stock position will carry deferred option cost. This is a very important feature of TradeMax!

But TradeMax don’t associate any irrelevant option and stock position. 2 conditions need to be met:

  1. The strike price, qty of option with stock exercised/assigned price.
  2. Occurred at same time.

We have attached a screenshot from our demo account which shows an option assigned to stock position.

From all the broker reports we have seen from our customers, we have not seen any broker finish their gain and loss report flawless, especially if the customer has merge events and options assigned, expired and/or exercised.

However, we found a problem, and this problem arises from the stock transactions where either our purchase resulting from the exercise of Put Options we had sold, or in assigning the shares to us at the strike price of the option, or by our sales resulting from the exercise of Call Options we had sold, or by taking an assignment from us at the strike price shares subject to the exercise of the Call Option. So far, we have not run into stock with options exercised on both the purchase and sale; but that may well have happened.

How to import Quicken QIF file to TradeMax


How to import Quicken QIF file to TradeMax?

  1. Use Quicken for Windows to open the data file.
  2. Select the File menu and select Export > QIF File.
  3. On the QIF Export window, click Browse.
  4. Enter the file name Security List.QIF, navigate to where you want to store the file, and click OK. Make a note of the location.
  5. Complete the remainder of the QIF Export window:
    • Click the Quicken Account to Export from drop-down arrow and select.
    • In the Include Transactions in Dates fields, leave the default dates.
    • In the Include in Export area, select Security Lists.
  6. Click OK to create the QIF file at the location you selected in step 4.
  7. Repeat steps 2 through 6 for Accounts, Categories, and Transactions.
    • Name the files Accounts.QIF, Categories.QIF, and Transactions.QIF.
    • On the QIF Export window, select the checkbox corresponding to the item in the file name.
    • Save all files in the same location.
    • Note: Making separate QIF files for each type of account ensures a successful transfer.
  8. Run TradeMax,Ceate an Account for your broker,and then Select import from local trade activity file
  9. In profile dropdown list choose “Quicken Interchange Format” and click browse file button choose your qif file.Then click Next to make further settings changes.

TradeMax can also import your trade data from your broker’s ofx server or local qfx or csv files. Please Check Here.

What brokers does your software support?


Technically, TradeMax supports every broker, known and unknown,  as long as the broker provides a statement in CSV/EXCEL format or Quicken Qif,QFX fomart / Money OFX format or OFX server connection. Without changing codes, TradeMax allows users to define their own templates which suit the CSV format of their broker’s data.


There are Four options to import your trade data into TradeMax:

A) Import Trades from online Brokerage Server(OFX Server)
If you want to download trades from an online brokerage account, select this option. Please check our supported broker’s OFX server list,if your brokerage provides ofx data service and is not listed in our list, you can fill in your broker’s name & ofx server URL in our contact form we will add it to TradeMax.

B)Import Trade Activity data from local file (Recommended)

  1. Built-in Broker Profile: Currently TradeMax already have build-in template for IB and ETrade, ScotTrade, OptionsXpress, TdAmeritrade,  Schwab, Person,Sogotrade and more.(Please check our supported brokers list),
  2. File Profile: TradeMax can support Quicken Interchange Format(*.QIF), TradeLog(*.TDF), Open Financial Exchange(*.OFX) file, Quicken Financial Exchange(*.QFX) file
    How to import Quicken QIF file to TradeMax
  3. Unknown column csv or excel file:You can either define your own template with trademax profile wizard function or send us a sample CSV or Xls data file with 8~10 lines of transactions in it for importing, we will build the template for our customer at no extra cost.

Import Sample files

Following documents contains sample trade data that you can download to practice or use as templates for importing transactions into TradeMax.

Trade Activity Sample Files.xls (Profile Wizard[*.xls])
Each Record has TradeDate,Symbol,Action,Qty,Price,Commission,Amount
15 kB
Realized Gain Loss Report.xls (Profile Wizard[*.xls]) –
(Symbol,qty,open/close date ,Proceeds /Cost Basis in single record)
18 kB

C) Import Realized Gains and Losses Report from Local File

If you already have Realized Gain and Loss Report, TradeMax can help you to import it directly from the local file with the following step-by-step wizard.More…

Please Note: Some Gains & Losses Reports do not have year end open postion, and this will affect wash sale calculating.

D) Import Trade data copied from broker Transaction History Report
You can copy your Broker’s Transaction History report from the web browser and paste to TradeMax during the importing process. More…

Upgrade failed,How do I update the trademax


Q:Update works except for trademax.exe. When I update, it says: “Update complete, please reboot your computer.”  I rebooted and it still tries to update trademax.exe and then tells me to reboot again. How do I update the trademax.exe?

A: This problem mightbe caused by your trademax.exe still using the current Memory when your update is complete.
Please Run Trademax, after “live update” dialog box pops up. Use your task manager to kill the TradeMax.exe
Then click “liveupdate” button. This will help in replacing the older version with the new updated version.

I have a web service provider which does cost basis report with wash sale adjustment, why should I buy trademax?


I have a web service provider which does cost basis report with wash sale adjustment; so why should I buy trademax?

  1. Brokers only provide the online data, and charge an annual service fee from you; and if you don’t renew your license, on or before the very day it is due to expire, then your login ID and all your data will be invalid and unavailable. With TradeMax, you will never be in such dilemma as you can always view and process the data in current year or prior years, even if you choose to stop using our software. As long as your TradeMax is still installed in your computer, you are able to access and process these data. It’s your data, this will never change.
  2. Web service providers only handle your data in current year,even some only provide the data of the last three months. But if you buy TradeMax, it handles data for current year and prior years. You also can easily generate cost basis report based on the data of multiple years with one-time license fee.

My broker provides cost basis report with wash sale adjustment, why do I still need to buy Trademax?


My broker provides cost basis report with wash sale adjustment, why do I still need to buy Trademax?

Someone asked me why investor could not use broker’s gain and loss report. Many brokers provide Gain and Loss report without considering the factor of WASH SALE RULES. Others claimed their Gain and Loss report compliant with WASH SALE RULES. Can you trust them? Never!

“I only had 5 trade a year, broker could not be wrong, so can I trust broker?” Never!

Here is a simple case with 2 trades involved. You placed a Limited Price Order with a broker, e.g. Scottrade. And you wanted to buy 1000 shares of XYZ at price of $10. I did not choose the option AON(all or none). Because it is a Limited Price Order, this order was not executed at once. At the day end, you got confirmation that my order was fulfilled by 2 transactions, a 500 shares buy at $10 and another 500 shares buy at $10. 1 week later, you sold 500 shares at $9 with a net loss of $500. Now, you have 3 transactions listed on year end statement. a 500 shares Open Long, a 500 shares Open Long and a 500 shares Close Long. Any broker who claims they have WASH SALE RULES built in their Gain and Loss reports, will report that you have $0 capital loss. It is WASH SALE RULES that your $500 loss is disallowed because you have bought 2nd 500 shares as replacement shares. However, this is a wrong result! Your real intention is to buy 1000 shares, the 2nd 500 shares is never an intention of replacing 1st 500 shares for continually holding. In real world, no broker will fix this kind of error for you. Their statement always list multiple transactions when a Limited Price Order executed in several transactions.

You can use software like TradeMax to alter transaction record downloaded from broker and use TradeMax Merge Transaction function in TradeMax to merge transactions when above mentioned scenario applied. In that case, you will have a 1000 share buy and a 500 shares sell in trades database. Software will generate a Form 8949 with $500 loss.

According to the definition of Wash Sale in IRS publication 550:

A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days

before or after the sale you:

1. Buy substantially identical stock or securities.

2. Acquire substantially identical stock or securities in a fully taxable trade.

3. Acquire a contract or option to buy substantially identical stock or securities.

The full publication can be found by contacting your local IRS office or visiting the IRS Web site at www.irs.gov

In 2008, the IRS issued Revenue Ruling 2008-5.In this ruling, IRS said, If an individual sells stock or securities for a loss and causes his or her individual retirement account or Roth IRA to purchase substantially identical stock or securities within 30 days before or after the sale, the loss on the sale of the stock or securities is disallowed.

When you calculate cost basis with wash sale adjustment, you need to combine all investments accounts owned or controlled by you, including your spouse’s account or any corporate account you control.

The wash sales rule also applies to short trade.

We rephrase Wash Sale Rule in a easy understandable sentence. “A Wash Sale occurs if you close an open position (An open position could be a long position or a short sale) of stock or securities at a loss and within 30 days, before or after the sale, you acquire an open position of substantially identical stock or security as a replacement in any associated account.”

In certain circumstance, substantially identical stock or security could include but not limited to

  1. Same stock listed in different stock exchange
  2. Same stock with certain type of preferred shares
  3. Trades between stock and option with same underlying
  4. Trades between stock and future/warrants with same underlying
  5. Trades between certain type of call options and put options at different strike price etc.
  6. Trades between securities with same security type but different orientation(Long and Short should be treated differently)
  7. Trades between certain securities issued by the same company

TradeMax allows users to make their own definition of substantially identical stock or security to suit various customer needs.

The wash sale rule aims to prevent an investor from obtaining the benefit of a tax loss without materially reducing economic exposure to the investment, so that investors cannot deduct losses from sales or trades of stock or securities when wash sale rules apply.

If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities (except in (4) above). The result is your basis in the new stock or securities. This adjustment postpones the loss deduction until the disposition of the new stock or securities. Your holding period for the new stock or securities begins on the same day as the holding period of the stock or securities sold.

The above description above refers to http://www.irs.gov/publications/p550/ch04.html#en_US_publink100010601

Now, many brokers have provided detailed cost basis report with calculated wash sales, but have confined themselves to reporting the wash sales within the same account and for the same CUSIP; in such cases, taxpayers are responsible for reporting wash sales for identical as well as substantially identical securities, across all owned taxable accounts. As for different and complicated wash sale scenarios, the cost basis report and wash sale calculated is far from accurate and completeness.

Definition of substantially identical securities TradeMax Broker Cost Basis Report Other Tax Software
Securities with same CUSIP Supported Supported Supported
Same stock listed in different stock exchange Supported Not Supported N/A
Same stock with different preferred shares Supported Not Supported N/A
Trades between stock and option( if the underlying stock is the same) Supported Not Supported Limited function
Trades between stock and stock future ( if the underlying stock is the same) Supported Not Supported Limited function
Trades across different accounts and joint accounts Supported Not Supported N/A
Trades between call option and put option at different strike price etc. Supported Not Supported Limited function
Trades between securities with same security type but different orientation Supported Not Supported N/A
Trades between securities issued by the same company Supported Not Supported N/A

TradeMax can not only auto-identify different complicated wash sale scenarios, but also can calculate wash sales across different accounts very accurately. With TradeMax, the users can maximize profits and figure out the disallowed losses and deductable losses by TradeMax which strictly coincides with the Wash Sale Rule of IRS. Inaccurate report means intangible losses in time and money which can be saved by using TradeMax’.

How to Adjust the Time of Trades?


How to Adjust the Time of Trades?

How to Adjust the Time of Trades?

You can use “Preset View” function in trade data view.Select “TradeFull” profile,”Trade Time” column will show the following figure:

Or use the “Field Chooser” function,and drag & drop “Trade Time” column to trade grid.

You should use numeric key for entering hours and minutes

1.Select the option Trade Time Control (For example, let us set “20:59” as the Trade Time of transactions)

2.Click the Hours “00:00″

3.Manually enter “20” in Hours Field

4.Then click the Mins “20:00

5.Use keyboard to enter “59”

6.The TradeTime will be changed to “20:59”

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