baseline |Form 8949 Capital Gain & Wash Sales calculator software

Can you explain what an unmatched trade is?


Q:I don’t quite understand what an unmatched trade is.  Can you please explain?


Sure,TradeMax use matched Trades to calculate capital gain&loss.(Long/CloseLong)(Short/CloseShort)

If TradeMax reports an Unmatched Trade in the Scan Information tab(part 4), this means you can close some securities, but you do not have any open position.

Unmatched Trades may be caused by 3 conditions:
1) You do not have FY2011’s Baseline (Baseline position is the holding open position from the previous tax year).

This can be rectified by importing the Baseline function or by manually enter the Baseline one at a time.
http://www.itrademax.com/ipress/detailed-instructions/enter-baseline-positions/enter-baseline-positions.htm

2) The Trade sequence is wrong
Some times, Brokers will send one day’s trade sequence en masse, without proper chronological ordering, which will cause problems.
TradeMax allows you to adjust the sequence of the transaction records traded on the same day by moving each transaction up or down the records.
3) Some Corporate Events mightcause the unmatched Trade Error.
In-built functions like the Stock Split, Merge or the Spin-off Action will help you change the stock quantity.

For example, these are some Unmatched Transactions that can be found in a database.


Clicking on the ‘Unmatched Quantity’ (highlighted in blue), will trigger TradeMax to move the transaction to the Unmatched Records.
case 1(172967101)

This error may be caused by missing Baseline Positions. (You should have 17296710’s Baseline Position on FY2011)

You can use the Import Baseline function or manually enter the Baseline one by one.

In this case, please make note of the Split Event, since if the Sell Stock is implemented after the Split Event, TradeMax will split it 1 to 10.
Whereas, if Sell Stock is before the Split Event, you must use the Move Up function to adjust 1251 and 1376’s sequence.

Case 2(EEM)

In this case, EEM has a “Div Event” on 2011-01-05 and has the Close/Long action on 2011-02-26, which implies there may be a Baseline Position error.Please check your Monthly Broker Statement.

Case 3 (F)

If you do not have enough stock, executing a Close action will cause an Unmatched Error.
In this case, 2400 shares were bought, whereas 2410 are to be sold, which is not possible. Hence TradeMax give you a warning.
Please check the trade history (Income reinvestment can help add 10 shares and thus avoid the error).

Case 4

In this case , the Trade sequence is wrong. Sometimes, Brokers  submit one day’s trade sequence without time ordering it and this will cause the problem.
If your Broker’s Trade History provides a Trade Time column, you can import it into TradeMax and it will automatically sort the sequence by the Trade Time.
Alternately, TradeMax allows you to adjust the sequence of the transaction records by moving up or moving down  each transaction. (Select record[134] and use the Move Down function to move it under record[136])

————————————————————————————————————

Red records which indicate the Error Transactions occur under the following conditions:

a. When there is no position on hold, and a Close action(Sale to Close, Buy to Cover) is exercised.
TradeMax allows to adjust the sequence of the transaction traded on the same day by moving a transaction record up or down.

b. When an option is exercised or assigned and the strike price of the option does not match the underlying stock trade price.
c. When an option is exercised or assigned and the quantity of the option does not match the underlying stock trade quantity .
d. When the option expires and the Close Price is not zero.
e. If there are Missing/Inconsistent Data fields while using Qty, Price, Commission, Fees and Rate datafield in an operation.

Green records indicate closed transactions which closed (via a Sale to Close or a Buy to Cover) all your holding open positions.

A .Dealing with this wrong transaction is a simple importing process. Activate the checkbox of Short Transaction Detectionand BuyCover&long /SellClose&short Trans Detection, and run a Reverse Same Day Transaction. Use Up or Down button to adjust the sequence of the trades or adjust the action. Use Quantity to correct any errors according to the cause and nature of the unmatched trades.

B. While Dealing with the wrong Transactions in Trade Grid, manually adjust the action, quantity and sequence of the trades to correct these errors.

Enter Previous Year Holding Positions


Baseline position is the holding open positon from the previous tax year.

If you are a new user of TradeMax and have hold open position from previous tax year, we recommend that you manually enter each position into TradeMax before you import the trade data of the current year so as to match your trades between these two years perfectly. There are two steps to entering this position details.

For example, suppose you bought some stocks in 2009 and remained open at the year end, if you import trade data in 2010 without entering the open position carried over from 2009, the trade data imported will be unmatched, even the generated reports and wash sale calculations will be inaccurate.

You can conclude a list of your open positions at year-end by checking your December monthly statement for the previous tax year. After that , you should enter these open positions to TradeMax in either of two ways.

a. Click the specific Finance Year, then click Append button in Trade Panel.

b. Select the specific Finance year and click the Baseline View under the selected finance year.

NOTE: TradeMax supports entering previous year holding position after importing the trade data, but entering before importing is recommended.

The following will tell you how to enter previous year holding position in TradeMax:

  1. Collect your open positions from the previous tax yearYou can collect the positions from your brokerage December statement.
  2. Click the Baseline view under the Account List to go to the Baseline window. (For example, enter baseline positions of 2008)
  3. Click Append button in Trade tab
  4. A popup dialog box allows you to record the purchase of a security below: 
    Function
    Description
    Enter Transaction There are the following options from its dropdown list :

    Buy to Open — Buy Stock/Option to Open a Long position
    Sell to Close — Sell Stock/Option to Close a Long position
    Buy to Close — Buy Stock/Option to Close a Short position
    Sell to Open — Sell Stock/Option to Open a Short position
    Default value is : Buy to Open

    Transaction Date Select the trade date
    Account Select the account to append your trade.
    Orig Currency Original Trade Currency type .There are seven Currency types in the dropdown list: USD, EUR,CAD,AUD,JPY,HKD,GBPIf you can choose EUR,CAD,AUD,JPY,HKD,GBP as Original Currency, and the dialog box will appear as an icon ,click this button, the dialog box will extend.
    Security Name
    Enter the security name manually in the Security Name field or Select it from the Symbol dropdown list.
    Additionally, the entering process supports AutoComplete function which pops up a list of suggestions to the user based on the characters entered.
    Base Rate Domestic currency type or accounting currency type for accounting purposes. Currently IB allows customer to choose different basis currency other than USD.
    Type Specify The type of trade transaction.  Available choices are: Stock/Option/Future.
    Number Of Shares
    For every Type of Stock, this field specifies the number of shares that have been traded. For Type of Option, this field specifies the hands of options that have been traded. Normally the value of ‘1’ indicates the option of exercising 100 shares of Stock
    Price (per share) The transaction price of Stock/Option per share/unit.
    Rate
    “Rate”related to derivative product like option, future. For instance, an option has a 100 “Rate” which means an option contract is for 100 shares of the underlying stock
    Underlying Stock The stock on which an option is written, giving the option holder the right to buy or sell.
    Commission
    Enter the commission of the shares. If left blank, the commission will be calculated from the value in the Amount column (providing the Amount includes commissions and fees).
    Amount The “Amount” will ba calculated automatically since you enter the “Number of Shares”, “Price” , and “Commission”.
    Strike Price The strike price of the underlying stock in the option or future
    Expire Date the date an option or stock expires
    Notes Enter the description of the transaction.
    Trade Include In Year
    Select the checkbox to activate it and enter the specified tax year.
    Defercost Used to enter the defer loss of this appending transaction.
    Click it to cancel the appending process.
    Click it to enter another new transaction.
    Click it to finish the appending process.

    Enter information of this transaction and press the button to finish the appending progress.

  5. A new record will be displayed at the bottom of Baseline window and the icon will become icon .
    Tips:

    • Means there is no baseline position in the Baseline window
    • Means there are baseline positions in the Baseline window.

Note:

  • Since your held positions do not belong to the current tax year, you need to select the Trade Include In Year checkbox and enter the specific tax year.
  • Please do not enter or import any closed positions from any year prior to the current tax year.
  • This only needs to be done once for each brokerage account. Every year thereafter, you can use the function End Of Tax Year to copy your year-end open positions to your next tax year data file.
  • If you have no open positions, you can skip this step.

Cost Basis


Cost Basis

Cost basis, as used in United States tax law, is the original cost of property, adjusted for factors such as depreciation. When property is sold, the taxpayer pays/(saves) taxes on a capital gain/(loss) that equals the amount realized on the sale minus the sold property’s basis.

From Publication 551: “Basis is the amount of your investment in property for tax purposes. Use the basis of property to figure depreciation, amortization, depletion, and casualty losses. Also use it to figure gain or loss on the sale or other disposition of property.”

The cost basis of any investment is the original value of an asset adjusted for stock splits, dividends and capital distributions. It is used to calculate the capital gain or loss on an investment for tax purposes. The calculation of cost basis can be complicated, however, due to the many changes that will occur in the financial markets such as splits and takeovers.

For example: If the company splits its shares, this will affect your cost basis per share. Remember, however, that while a split changes an investor’s number of shares outstanding, it is a cosmetic change that affects neither the actual value of the original investment, nor the current investment. Continuing with the above example, imagine that the company issued a 2:1 stock split where one old share gets you two new shares. You can calculate you cost basis per share in two ways: First, you can take the original investment amount ($10,000) and divide it by the new amount of shares you hold (2,000 shares) to arrive at the new per share cost basis ($5 $10,000/2,000). The other way is to take your previous cost basis per share ($10) and divide it by the split factor (2:1). So in this case, you would divide $10 by 2 to get to $5.

How TradeMax Can Help with Cost Basis

TradeMax can help with cost basis calculations. Investors enter original buy and sell transactions into TradeMax. TradeMax will allow you to match sell transactions against appropriate tax lots, and adjust positions and cost basis for corporate actions and wash sales manually.

When importing trade information from some brokers, users may receive baseline positions. These are positions that investors held open at the time their brokers sent their trade data. In order for TradeMax to accurately calculate gain/loss figures, users need to input their cost basis and purchase dates for these baseline positions.

Quick-Start


Quick-Start

To get started using TradeMax with minimal amount of time, please follow these steps or watch our online tutorial :

Notes : If your PC system is Win 7 or Windows Vista , you will be required to run TradeMax as an administrator during the process of handling your transaction charts or reports . How to run TradeMax as an asministrator in Window 7 or Vista?

  1. Create a New Account File
  2. Setup a New Account
  3. Import or Append Your Trades
  4. Confirm Trade Data
  5. Adjust Your Trades for Tax Purpose
  6. Generate Performance Report
  7. Export Form 8949 Report for efiling
  • Open Database or Create a New Account File

  • Click “Open” button on the trade panel

    The following dialog box will popup

    Basic Function
    1. Create New Enter the account name and press “OK” to create a new account file.
    2. Open Exist Select an existing account file (e.g. DemoAccount.tmx) and press “OK”.
    3. Select Folder Click “Select Folder” button to select account file folder from your computer. Or click the Triangle button and select “Open” to open account file folder.
  • Setup an account to import your trades

  • You can setup a separate account for each brokerage and trader by right-clicking the item on the Account List and selecting theAdd New Account.

    TradeMax will pop-up a dialog box to complete your account information. For usage within TradeMax the minimum information required to be entered is the Broker Name, Account Name, Type and Currency.

    Then TradeMax will automatically create a new account in the Account List like the following: (For example, Interactive Brokers Jone is the new account name)

    The FY2008 contains the whole trade data and the baseline positions of the tax year 2008 and the trades executed in January of the following tax year

    The Finance Data contains the cash flow data, for example, cash dividends.

    The Trade Data contains the important data for the Schedule D purpose

    Learn more about: Setup a New Account.

  • Import or Append Your Trades

    1. If you are using TradeMax for the first time and have hold open position from previous tax year, you can import holding position into TradeMax separately OR just manually enter previous year holding position into TradeMax.
      • Since your held positions do not belong to the current tax year, you need to select the Trade Include In Year checkbox and enter the specific tax year.
      • Please do not enter or import any closed positions from any year prior to the current tax year.
      • This only needs to be done once for each brokerage account. Every year thereafter, you can use the function End Of Tax Year to copy your year-end open positions to your next tax year data file.
    2. Import Holding position into the Baseline View under selected account.

      OR manually enter the holding position by appending a trade in Baseline view.

      For example, you bought some stocks in 2009 and remained open at the year end, if you import trade data in 2010 without entering the open position carried from 2009, TradeMax will fail to match trade data, the generated reports and wash sale calculation will also be inaccurate.

      You can locate a list of your open positions at year-end by viewing your December monthly statement for the previous tax year. For example, if you are working on tax year 2010, you will need to locate your December 2009 monthly statement.

      Learn more about: Append a Trade.

      Note:

    3. If your trade data are complete which already include all the open postition or have no open position, just import it directly.
      1. Right Click the selected broker account you set up, then select Import Trade from its dropdown list.
      2. The Select Import Data Source Dailog box pops up, and there are three options for users to import your trade data.
        • Please import the current tax year trade data and January of next tax year for the tax purpose.We suggest you import the data until the end of the March in case of the negligence.The January of next tax year trades are required for properly calculating wash sales.
        • Please do not import any closed positions from any year prior to the current tax year as this also will distort the profit/loss calculations for the current tax year.
        • For the unsupported brokers, users can set up new one in Profile Wizard dialog box.
      3. Option Description
        1. Import Trade from online brokerage If the security trader holds online brokerage account, TradeMax provides an easy wizard to import trades from brokerage account. Just enter the user name and your password during the import process, TradeMax will auto-import your transaction history from your online broker directly.Note: TradeMax supports the following brokers via OFX Server : Ameritrade OFX Server, Fidelity Investment, Penson Financial, Schwab, ScotTrade, BOA Investment, E*Trade, Harrisdirect , OptionsXpress, Vanguard, Merrill Lynch, UBS, etc)
        2. Import trade from local file
        1. TradeMax can import ofx,qfx,qif,tlf files with pre-defined file profileTradeMax provides the facility to import Trade Activity data (*.csv,*.xls) with pre-defined brokerage profile,please check our supported brokerage list. click Detail link to get how to download trade activity data from your broker.
        2. TradeMax also can use Profile Wizard funtion to import unknow format trade data (such as a downloaded CSV file, Text file, excel file from unknow broker) .
        3. Follow documents contains sample trade data that you can download to practice or use as templates for importing trade activity into TradeMax.
          http://www.itrademax.com/download/tradeactivity.xls
        3. Import trades copied from broker transaction history If the security trader holds online brokerage account, TradeMax provides an easy wizard to import trades from web using Transaction History Report, the users just need to copy the Transaction History Report from the web of specific broker, then paste to TradeMax’s clipboard during the import process.

        Note:

  • Confirm Your Data

  • After each importing, you need to make sure everything is matched properly and the unmatched trades will be displayed in Red in TradeMax , TradeMax provides three confirmation steps to complete the task:

    1. You can click the Information Icon at the down-left corner, the Information Grid will appear, then click the Scan Tab to scan the status of transactions in the current data grid and the concerned trades will be highlighted in red or green so that you can adjust your trades.
    2. You can check whether your holding position carried from previous year were imported completely or not by comparing your holding positions in TradeMax with your broker’s December statementThe holding positions should be the same.Learn more about: How to display all holding position.If there is any unmatched position, you can check these:
      • Make sure to take unsettled trades on the December brokerage statement into account.
      • Make sure to adjust for securities referring stock splits, mergers, spinoffs or symbol name changes. Stock Splits | Mergers | Spinoffs | Changing Symbols
  • Adjust Your Trades for Tax Purpose

    1. After all data is confirmed, the next step is to make some adjustment for the tax purpose. If there is no such trade, this step can be skipped.
    2. After confirming that all trades of the current tax year are imported and matched correctly, you are ready to execute the function “ End of Tax Year” on your account for the next tax year.  It shows the year end open position and wash sale defer loss, also can auto- generate hold position carried from this year for next tax year and defer cost to these positions.
    3. Learn more about: End of Tax Year topic.

      Note:

      To enable TradeMax to calculate wash sales and defer losses to the following tax year when applicable, you need to enter the trades executed in January of the following tax year

      first.

      If you have several different brokerage accounts, you must combine these into one account so that TradeMax can calculate wash sales across accounts.

      Right click the account and select the Add View > Custom to complete the Combine Account process. Then run the combined account just as the single account.

      Learn more about: Combine Your Accounts.

  • Generate Performance Reports

  • Many investor trade security in other currencies such as EUR, CAD, AUD, JPY, HKD, GBP, CHF, TradeMax now supports running report in your base currency and in USD currency for tax purpose.

    To generate a report, right-click the specific account and select the specific report type.

    The Base Currency is the first currency quoted in a currency pair.  The base currency is referred to as the parent currency and exchange rates are quoted in per unit of the base currency.  The base currency is the more valuable currency.  Therefore in the HKD/USD currency pair, the HKD is more valuable than the dollar, so it is the base currency.  The base currency is also known as the accounting currency or domestic currency. TradeMax supports running reports on the following base currencies such as EUR, CAD, AUD, JPY, HKD, GBP, CHF.

    The following report types are available:

    1. Cost Basis Transaction Report -This report is for those users who track the cost basis in stocks, bonds and mutual funds to report a cost basis when an investment is sold.
    2. Daily Market Value Report - This report is for those users who track the performance and market value of the securities on daily basis in specific finance year. The report will show the portfolio of every transaction on daily basis.
    3. IRS Schedule D-1 - This report is for those users who require a more exact replica of the IRS form.
    4. Mark to Market Detail Report - This report is for those users  want to record the price or value of a security, portfolio on a daily basis to calculate gains and losses or to confirm that margin requirement are met.
    5. Mark to Market For Form 4797 - -This report is for traders in stocks, options and single-stock futures who elect mark-to-market accounting to report their trading activity on Form 4797.
    6. Realized Gain/Loss Report - This report is for those users who require trade transaction detail. Such as Security, Quality, open price, Open date, Open Commission, close price, close commission, sales price, cost basic, Actual gain &lose for each transaction. Moreover, it can be grouped by ID, Symbol, or TradeDate.
    7. G& L Report - This is the default report created by TradeMax for filing with Taxes.
    8. SummaryReport - Display or print a trade summary report. This valuable summary or aggregation of an entire ID or Symbol allows a user to see how one Symbol performed versus another
    9. Transaction Detail Report - A report display all trade detail. This report lists each and every transaction as displayed in the grid. Additionally, the profit or loss can be summed by Trade Number, Ticker, or Date.
    10. Unrealized Gain/Loss Report - This report is for those users who  want to get the information of Gain/Loss when the price of the securities decrease or increase after buying, but he or she has yet to sell it.
    11. Wash Sale Detail Report- This report allows you to analyze your disallowed wash sale losses that have been deferred to next year
    12. Section 1256 Report - This report is for those users who want to get the information of Unrealized Gain/Loss amount and 60% long term amount and 40% short term amount auto-calculated by TradeMax as an attachment to Section 1256 contract.
  • Export Schedule D-1 Report for efiling

    After running TradeMax Schedule D-1 report, you can either print it in appropriate format and attach it to your tax return, then file by mail, or just export your gains and losses generated by TradeMax to popular Tax software with TXF Export function.

    1. Export the generated Schedule D-1 Report and print it in opened file. OR Select the above report, directly print it by pressing button in TradeMax.In the Description of Property column on your IRS Schedule D (for cash basis accounting), write “See attached report”. Then simply copy the totals from your TradeMax IRS Schedule D-1 report which serve as the attatchment to efile with your schedule D.Learn more about: How to Print your Report.
    2. Export your Schedule D-1 to popular tax software with TXF Export function.TradeMax provides you with an easy way to export your Schedule D-1 with TXF Files.TXF File Export is a report type which allows importing your TradeMax Schedule D-1 into popular tax software such as TurboTax .
  • End of Tax Year


    After all trades executed during the tax year have been imported and matched correctly, you are ready to end of tax year for the next tax year.
    With this function, you can check next tax year’s baseline position include year end open position and deferloss to each washsale position.

    Let’s take the Tax year 2005 as an example. Please follow steps below to End the Tax Year:

    1. Right-click the folder FY2005 under the specific account in the Account List and the following dialog box will pop up:You will see 2005 Year End Open Position & Defer Loss.
    2. Confirm your open position with your December statements from your brokerage.If there is any unmatched position, you can check these:
    3. Click on Next button and the New Year Baseline Position dialog box will show:
      The baseline position contains Open Position (long, short)

      Learn more about: Long, Sell to Open

    4. Click Finish to complete the progress. Then next tax year’s baseline position and defercost will display in next tax year’s (In this example, it is tax year 2006) Baseline window and data grid as the following:After end of the tax year, you will see,
      • the next tax year Baseline view icon will become icon .
      • the Finance year view icon will become icon

      Tips: Finance year view Icon means you have already done End of Tax Year.

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