Interactive Brokers has taken the time to ensure that the gain/loss figures are calculated according to your elected tax methods. Sell transactions are offset versus the original purchase details available. Consider the following limitations and issues as you review the Worksheet.
For each of the transactions labeled corporate actions, adjustments under to the Worksheet in formation may be required. The IB Worksheet does not make those adjustments. Activity classified by the issuer as a sale may be included on the Worksheet, the 1099-B's box 2, and under the Annual Statement’s Corporate Actions section.
Transactions designated as corporate actions include those processes that impact shareholders by Publicly Traded Companies and result in a material change. Over 50 voluntary or mandatory actions fall in this category. Some of the most common processes which may be reported include:
► Acquisition ► Merger
► Captial Reduction ► Reverse Split
► Conversion ► Rights Issue
► Dividends or Interest ► Stock Split
Options not considered to be Section 1256 contracts appear. Special rules apply for assignments and exchanges. The IB Worksheet makes adjustments. The option transaction’s proceeds do NOT get included on the Worksheet next to the actual trade. In accordance with IRS guidelines, IB includes the proceeds with the assigned stock. The IRS Publication 550 on page 57 describes in detail the adjustments required for both the option writer and holder.
If an option expires during the year, IB enters the expiration date under column (c), Date Sold, 0.00 under column (d), Sales price, and assigns “Ep” under the Codes column. The gain or loss treatment differs for the option writer and holder. See IRS Publication 550 for details.
Securities sold during the year that you do not own are short sales. The sale proceeds are included in the 1099-B, box 2, and on the Worksheet, regardless of the year in which the sale is covered or closed. This may cause a difference in the figure reported for your tax purposes versus the IB Worksheet and the 1099.
Determination of gain or loss takes place when the security covered is purchased at a later date. The IB Worksheet makes adjustments for current and prior year sales. See IRS Publication 550, page 55 for details.
The default tax basis method for IB accounts is First In, First Out (FIFO). This matches the the first assets purchased with most recently sold assets for gain and loss tax purposes. In January 2009, we added an option to allow modification of the tax basis method. Customers may elect two additional methods, Last In, First Out (LIFO) or Maximize Losses (ML).
On the Worksheet, trades using the default FIFO method do not have an identification code. For trades using the methods LIFO or Maximize Losses, the following codes apply:
First In, First Out (FIFO), code = no code appears
Last In, First Out (LIFO), code = LI
Maximize Losses, code = ML
Note: The tax basis method may be changed for trades going forward through Account Management. Select Report Management and choose Tax Basis Declaration.
The cost of a transferred security reflects the closing price value and date acquired "as of" the transfer settlement date. An exception applies for cost and date acquired details manually entered by you within Account Management before January 1. The IB Worksheet makes adjustments for these entries.
If you were unable to complete the online adjustment, then contact your former financial firm for the original cost basis.
Note: IB provides the ability through Account Management to update the basis by December 31. Updates reflect on all future statement records. Select Report Management and choose Position Transfer Basis.
Stock or security trades sold at a loss, but purchased again within 30 days may be considered wash sales. The IB Worksheet does identify wash sale trades, beginning in tax year 2009. Trades considered wash sales are identified by the code “WS” (disallowed loss form wash sales). For more details on trades considered wash sales or the adjustments, see IRS Publication 550, page 56.
Click here to go back to the main 2009 Worksheet article.
For information about when all tax forms are made available, go to our Tax Information and Reporting page, then click the Reporting Dates tab.
IRS Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.