2009 Gain/Loss Summary Worksheet: General Explanation

Important Note:  The Worksheet has been prepared using IRS guidelines for information purposes only.  It is not intended to replace any official IRS tax forms or schedules; and should not be regarded as an IRS Form Schedule D.

Interactive Broker's 2009 Gain/Loss Summary Worksheet ("Worksheet") provides the capital gains and losses for your account's year-end review.  Investors of a limited number of securities will find the pairing of 2009 sell trades useful.  Designed to aid with your year end reconciliation, the following securities and trades are included: Bonds, Equity Options, Fractional Shares, Index Futures*, Mutual Funds, Short Sale, T-Bills, Tender Offers, and WHIFITs.

A general explanation of the Worksheet is organized below by Parts, Columns, and Totals.

 *Only cash-settled

Worksheet Parts

The Worksheet is divided into two parts.  The period in which you held the position determines whether or not Short-Term or Long-Term applies. 

Part 1 - Short Term Capital Gains and Losses - Assets Held One Year or Less

Part 2 - Long Term Capital Gains and Losses - Assets Held More Than One Year

Worksheet Columns

Each section contains the following seven columns to identify your trades.

(a) Description of property (b) Date acquired (c) Date sold (d) Sales price (e) Cost or other basis (f) Gain or (loss) Codes

1.  (a) Description of property...shows the security symbol, name, quantity, and other information to identify the asset sold.

Example:  500 sh. DB - DEUTSCHE BANK AG-REGISTERED

2.  (b) Date acquired...shows the trade date of your security's purchase. 

Asset Transfers:  IB has entered the date supplied by you through Position Transfer Basis.  If an update was not received by year-end, then the asset transfer settlement date appears. See your monthly or annual summary for details. 

Short Sales:  The box is left blank if the closing trade has not been completed.  For short sales included on a prior year Worksheet or 1099-B, the code ADJ is entered.

3.  (c) Date sold...shows the trade date of your security's sale.

4.  (d) Sales price...shows the gross security sale price, net of commissions. 

Option Adjustments:  For exercised call options, the writer's sale proceeds have been increased by the amount received for the call. For exercised put options, the holder's sale proceeds have been reduced by the cost of the put. See IRS Pub. 550, page 57, for details.  For expired options, an amount of 0.00 is entered, followed by the Code "Ep".

5.  (e) Cost or other basis...shows the total price paid for your security, plus commissions.

Corporate Actions:  Adjustments have not been made for any stock splits or non-dividend distributions. See IRS Pub. 550, page 44, for details.

Mutual Funds:  IB does not use an average basis for mutual funds. The First In, First Out (FIFO) method is used.

Original Issue Discount:  The basis has not been increased by the amount of OID included in your income. See IRS Pub. 550, page 13, for details.

Option Adjustments: For exercised put options, the writer's basis has been increased by the amount received for the put.  For exercised call options, the holder's basis has been increased by the cost of the call. See IRS Pub. 550, page 57, for details.

6.  (f) Gain or (loss)...shows the calculation for each security using the tax execution methods First-In, First Out (FIFO), Last In, First Out (LIFO), or Maximize Losses (ML). 

Loss: Negative amounts are identified in parentheses.  For example, a loss of $2,000.00 displays as (2,000.00).

Tax Method:  If no code appears in the Codes column, then FIFO applies.  The other methods are noted by either LI = LIFO or ML = Maximize Losses.

7.  Codes...shows various trade designations, such as: corporate actions, asset transfers, or option assignments.

Codes and Meanings Table:  The last page of the Worksheet contains a table to identify each non-security symbol used.

Worksheet Totals

1. Subtotal adjustment from option assignment...shows the total amount of all sale proceeds increases or decreases made from option assignments to the assigned stock sale proceeds (see Cost or other basis details above). 

The adjustments, in accordance with IRS guidelines, are added or subtracted in order for the next Subtotal line to equal the amount reported by IB on the 1099-B, box 2.  Please keep in mind that IB does not report any option proceeds or adjustments to sales proceeds from assignments on the 1099s.

2.  Subtotal for stocks, bonds and T-bills...shows the total non-adjusted proceeds reported for each trade under column (d) Sales price for stocks, bonds, and T-bills only.  This amount should equal the 1099-B, box 2, amount. 

1099-B, box 2:  In general, this 1099 figure should equal the combined Parts 1 & 2 Subtotal for stocks, bonds and T-bills figure.

3.  Total...shows the combined proceeds for all trades under column (d) Sales price, including option sale proceeds.

Total Option Sale Proceeds:  Subtract the Total amount of column (d) from the Subtotal for stocks, bonds and T-bills of column (d) to obtain the total proceeds from all option sales.

 

Click here to go back to the main 2009 Worksheet article.

Note:  Securities classified by the IRS as IRC Section 1256 contracts are included on the Gain/Loss Worksheet for 1256 Contracts.

 


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.

 

What’s New for the 2009 Gain/Loss Summary Worksheet

 

 
Wash Sales – If you sold a stock or security at a loss, but re-purchased within 30 days the same or substantially the same security, the Worksheet identifies the sale using code “WS” (Disallowed loss from wash sale).
 
Social Security Number – For security purposes, the first 5 digits of the tax identification number have been removed.
 
Tax Basis Declaration – Two new tax basis methods, made available January 2009, help identify gain/loss methods for trades.  The optional methods Last In, First Out (LIFO) and Maximize Losses (ML) join the default First In, First Out (FIFO) on the Worksheet.
 

Select Gain/Loss Summary Worksheet: Considerations for details about the new features.

Click here to go back to the main 2009 Worksheet article.

 

 

 

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.

Understanding the 2009 Gain/Loss Summary Worksheet

IMPORTANT NOTE: This article has been customized for use by individual US taxpayers investing in securities for information purposes only.  Persons are encouraged to consult a qualified tax professional with the preparation of tax returns.  IB does not provide tax advice.  Traders or dealers in securities, for whom other tax treatment applies, may find the worksheet helpful.  The methodology used to determine the yearly gain or loss, however, differs.  Traders electing the mark-to-market accounting method may consult IRS Instructions for Form 4797, page 2.

The 2009 Gain/Loss Summary Worksheet calculates the gain or loss for your securities bought and sold from January 1 through December 31 utilizing the Internal Revenue Service (IRS) guidelines.  Every sell trade executed appears, including short sells, on a trade-date basis.  Not all securities, however, are eligible for inclusion.  For additional information, see the following article categories.


Below we have categorized information about this year's "Worksheet" within the IB Knowledge Base.  Each article provides more details to assist with your understanding of this tool.

 

 

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.

Cost Basis & Asset Transfers

Overview: 

The Emergency Economic Stabilization Act of 2008 introduced cost basis reporting requirements for U.S. firms. The law now requires firms to include cost basis and the holding period of closed positions on tax forms for US persons/entities.

This article outlines a few things that affect cost basis information with asset transfers.

 

Cost Basis information may follow the movement of assets between accounts, both internal asset transfers and external asset transfers.  The following information goes into more detail on these.

Assets Received From Another Firm

Assets Transferred Between IB Accounts

Assets Delivered Out To Another Firm

 

Covered/Non-Covered Securities

Covered Securities > Assets that US firms will report cost basis to the Internal Revenue Service (IRS) on Form 1099.  Taxpayers will use the reported data with their tax filing. 

Non-Covered Securities > Assets that US firms may report cost basis to the IRS.  Taxpayers will report cost basis to the IRS.

 

Assets Received From Another Firm

 By law, Firms that transfer customer assets to another financial institution must also deliver cost basis information to the new firm within 15 days of the asset delivery.  

The cost basis data may not automatically transfer into IB LLC.  If the delivering firm knows the lots to be “Non-Covered,” then firms are not required to send any cost basis.
 
  • When can I expect my Cost Basis to update after the transfer of a “Covered Security”?  

If the delivering firm participates in the Cost Basis Reporting Service (CBRS), then IB LLC usually receives the data within 10 business days after the assets post to an IB account.

  • When can I expect my Cost Basis to update after the transfer of a “Non-Covered Security”?
Your account may not reflect an updated cost basis. The Activity Statements will display a unit price as of the closing price on the asset transfer date.  
 
When the delivering firm fails to send cost basis data, then the transferred assets are considered uncovered for the purposes of the Emergency Economic Stabilization Act of 2008. IB will flag the assets as Non-Covered and will not include the cost basis data on any tax forms or reports. 
  • What are your options when the other firm does not send any cost basis data to IB LLC?
For a “Covered Security,” clients should contact the delivering firm and request transmission of the cost basis directly to IB LLC. The other firm must send the information directly to IB.
 
For a “Non-Covered Security,” clients should retain the original cost basis for their records and consult their tax advisor. IB will flag the asset as non-covered and will NOT report cost basis information to the IRS.  Clients will remain responsible to report non-covered security transactions with the correct cost basis to the IRS.
  • Can clients send cost basis information to IB for their transferred securities?
No, regulations prohibit IB from form accepting customer-furnished cost basis data on covered securities for US persons and entities. 
 
 

Assets Transferred Between IB Accounts

Cost basis information will follow internal account-to-account transfers at IB and other movements of securities with like-titled accounts.
 
 

Assets Delivered Out To Another Firm

By default, IB delivers cost basis information to other firms with all outgoing asset transfers electronically via the Cost Basis Reporting Service (CBRS).  IB does not send paper Cost Basis Transfer Statements.

 

 

For information about when all tax forms are made available, go to our Tax Information and Reporting page, then click the Reports & 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.

Why are corrected 1099-DIV forms issued ?

Form 1099-DIV is published with the classification or tax character of the dividends at the time of publication.  Issuers may make adjustments or corrections following the required 1099 issue date.  IB is required to re-issue a corrected 1099 with the changes when known to both you and the IRS.

Notification will be sent to you if a corrected 1099 is issued and posted in Account Management. Consult your tax advisor for further guidance.

 

Disclaimer:  IB does not provide tax advice. 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 international, federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. We recommend that you consult a qualified tax advisor or refer to the U.S. Internal Revenue Service.

How do I select my Country of Legal Residence?

Overview: 

Choosing the correct Country of Legal Residence for non-US persons is important and may provide lower withholding rates.   All Interactive Brokers accounts must select a Country of Legal Residence due to regulatory and reporting laws.

The Country of Legal Residence is your tax home.  Generally, this is your main place of business, employment, post, regardless of your family home.  It is the place where you work or attend school on a long-term basis, permanantly, or indefinitely. 

For an entity, the tax home is the place where the entity was formed.

Your Country of Legal Residence is not always the same as your Passport Country.  For example, a South African passport holder may attend 4 year university in France.  During the study in France, the student tax home would be considered France. 

What if I pay taxes in two countries this year?

It is possible to pay taxes in two countries and to be considered a Legal Resident of both countries during the same year.  When completing an account application, your choice would be the country in which you currently live and will pay taxes to. 

What if I do not have a regular place of business?

In some cases, persons may not have a regular place of business or home.  Your tax home is the place where you live on a regular basis or wherever you work at the time of your application submission.

What if none of these applies?

Your Country of Legal Residence is wherever you work.

For additional help determining your status as either a non-US Legal Resident or a US Legal Resident, visit www.irs.gov to review the IRS Publication 519 or visit http://www.irs.gov/publications/p519/index.html  

 

Disclaimer:  IB does not provide tax advice. 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 international, federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. We recommend that you consult a qualified tax adviser or refer to the U.S. Internal Revenue Service.

 

How does a non-US person or non-US entity claim a refund of US taxes?

Overview: 

Non-US persons or entities must file an income tax return with the United States tax authority in order to claim a refund of over withheld or overpaid tax.

Form 1040NR or Form 1040NR-EZ must be filed by eligible persons with the U.S. tax authority (Internal Revenue Service) to claim a refund.  Use of the forms is limited to non-U.S. persons and non-U.S. entities.   Those filing must have had U.S. tax withheld from U.S. source income.

For questions about "eligibility to file" or "how to file," visit the U.S. Internal Revenue Service online at  www.irs.gov . Enter within the site's search engine one of the following headings for additional information:
 

  • Publication 519, US Tax Guide for Aliens
  • Taxation of Nonresident Aliens
  • Instructions for Form 1040NR

Disclaimer:  IB does not provide tax advice. 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 international, federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. We recommend that you consult a qualified tax advisor or refer to the U.S. Internal Revenue Service.

Tax Reporting: When does Equity Trust send the 1099-R information to the IRS?

Background: 

The information will be provided to the IRS by March 31 of the year following the year in which the IRA distribution takes place.

Tax Treaty Benefits

Overview: 

Income payments (dividends and payment in lieu) from U.S. sources into your IB account may have U.S. tax withheld.  Generally, a 30% rate is applied to non-U.S. accounts.  Exemption from the withholding or a lower rate may apply if your home country has a tax treaty with the U.S.  Complete the applicable Form W-8 to find out your status. 

Background: 

Tax Treaties*

U.S. tax treaties with some countries have different benefits.  Legal tax residents of the following countries may be eligible for the treaty benefits.  Below is a list of the tax treaty countries.  Benefits vary by country.

Australia Czech Republic India Lithuania Sweden
Austria Denmark Indonesia Poland Switzerland
Bangladesh Egypt Ireland Portugal Thailand
Barbados Estonia Israel Romania Trinidad & Tobago
Belgium Finland Italy Russia Tunisia
Bulgaria France Jamaica Slovak Republic Turkey
Canada Germany Japan Slovenia Ukraine
China, People's Rep. Of Greece Kazakhstan South Africa United Kingdom
Commonwealth of Ind. States Hungary Korea, Rep. of Spain Venezuela
Cyprus Iceland Latvia Sri Lanka  

*Country list as of April 2009

 

Refer to IRS Publication 901 for details on withholding rates for your tax residence country and your eligible benefits.

 

Why am I required to provide a W-8 if I am not a US citizen or resident?

As IB LLC is a carrying broker domiciled in the U.S., it is required to report information and, in certain instances, make payment of withholding taxes to the U.S. tax authority, the Internal Revenue Service for all account holders. To certify oneself as a non-U.S. person, a Form W-8 is requested at the time of application and is required to be re-certified every three years thereafter. If IB does not receive the W-8 or the account holder fails to re-certify the W-8 in a timely manner, then the account holder is presumed to be a US person and, absent a W-9, may then be subject to back-up withholding taxes on interest, dividends and substitute payments in lieu, as well as gross proceeds.

By certifying yourself as a non-U.S. person through a properly completed W-8, your U.S. withholding is limited to dividends issued by US corporations. Note that virtually all countries apply withholding taxes when local companies seek to distribute dividends to externally based shareholders (whether those shareholders are corporate or not). The rate at which IB is obligated to withhold for a given payment depends largely upon whether there is a tax treaty in place between the country where the dividend paying country is based and the country of residence of the dividend recipient.

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