Stock Yield Enhancement Program FAQs
What is the purpose of the Stock Yield Enhancement Program?
The Stock Yield Enhancement program provides customers with the opportunity to earn additional income on securities positions which would otherwise be segregated (i.e., fully-paid and excess margin securities) by permitting IB to lend out those securities to third parties. Customers who participate in the program will receive a portion of the fee paid by the borrower as loan compensation for any day the loan exists and will receive cash collateral to secure the return of the stock loan at its termination.
What are fully-paid and excess margin securities?
Fully-paid securities are securities in a customer’s account that have been completely paid for. Excess margin securities are securities that have not been completely paid for, but whose market value exceeds 140% of the customer’s margin debit balance.
How is the income received by a customer on any given Stock Yield Enhancement Program loan transaction determined?
The income which a customer receives in exchange for shares lent depend upon loan rates established in the over-the-counter securities lending market. These rates can vary significantly not only by the particular security loaned but also by the loan date. In addition, IB assesses a Management Fee equal to 50% of the net loan fees paid in exchange for initiating, terminating and managing transactions. In determining the customer’s portion of these fees, the Market Fee Rate % is applied to the loan collateral and this daily Gross Lending Fee is split equally between IB and the customer. For example, assume loan collateral of $10,000 and an annualized Market Fee Rate of 15%. In this example the daily Gross Lending Fee would be $4.16 (($10,000 *.15)/360), of which $2.08 would accrue to the customer and $2.08 to IB as its Management Fee. Lending fees are calculated and accrued daily similar to interest credits.
How is the amount of cash collateral for a given loan determined?
The cash collateral underlying the security loan and used for determining interest payments is determined using standard industry convention whereby the closing price of the stock is multiplied by 102% and then rounded up to the nearest whole dollar. For example, a loan of 100 shares of a stock which closes at $59.24 would be equal to $6,100 ($59.24 * 1.02 = $60.4248; round to $61, multiply by 100).
What are the eligibility requirements for participation in the IB Stock Yield Enhancement Program?
All IB LLC and IB UK margin accounts or IB LLC and IB UK cash accounts with equity over $50,000 at the time of application are eligible. IB Canada, IB Japan and IB India customers are not eligible. Japanese and Indian clients maintaining accounts with IB LLC are eligible.
In addition, Financial Advisor client accounts, fully disclosed IBroker clients, non-disclosed IBroker clients and Omnibus Brokers who meet the above requirements can participate. In the case of Financial Advisors and fully disclosed IBrokers, the clients themselves must sign the agreements. For non-disclosed IBroker and Omnibus Brokers, the broker signs the agreement.
Are IRA accounts eligible to participate in the Stock Yield Enhancement Program?
No.
How do I enroll in the IB Stock Yield Enhancement Program?
Clients who are eligible and who wish to enroll in the Stock Yield Enhancement Program may do so by selecting Trading Access and then Trading Configuration from Account Management and then checking the box on the Trading Permissions matrix titled "United States (Stock Yield Enhancement Program)".
What happens if equity in a participating cash account falls below the $50,000 qualifying threshold?
The cash account must meet this minimum equity requirement solely at the point of signing up for the program. If the equity falls below that level thereafter there is no impact upon existing loans or the ability to initiate new loans.
What is the difference between AQS and the IB Stock Yield Enhancement Program?
Clients lending through AQS participants self-direct their activity based upon information provided via AQS’ automated centralized market. In contrast, loans transacted through the Stock Yield Enhancement Program are determined and managed by IB.
Can I participate in both AQS and the IB Stock Yield Enhancement Program?
Clients can only lend in one program at a time. If, for example, a client signs up for the Yield program and is already approved for AQS lending, we will disable their ability to lend at AQS and recall their loans. They will still, however, retain the ability to borrow through AQS and can see market data. If the client disables the Yield Enhancement Program, their AQS loan permissions will be re-enabled. In sum, the yield program always takes precedence.
If my account is eligible for AQS am I automatically eligible to participate in the IB Stock Yield Enhancement Program?
No.
If my account is eligible for the IB Stock Yield Enhancement Program am I automatically eligible to participate in AQS?
No.
How does one terminate Stock Yield Enhancement Program participation?
Clients who wish to terminate participation in the Stock Yield Enhancement Program may do so by selecting Trading Access and then Trading Configuration from Account Management and then removing the check from the box on the Trading Permissions matrix titled "United States (Stock Yield Enhancement Program)".
Requests to terminate are typically processed at the end of the day.
What types of securities positions are eligible to be lent?
Eligible securities include U.S. common stocks (exchange listed, PINK and OTCBB), ETFs, preferred stocks and corporate bonds. Municipal bonds and non-U.S. securities are not eligible.
Is there any restriction on lending stocks which are trading in the secondary market following an IPO?
No, as long as IB is not part of the selling group.
How does IB determine the amount of shares which are eligible to be loaned?
The first step is to determine the value of securities, if any, which IB maintains a margin lien upon and can lend without client participation in the Stock Yield Enhancement Program. A broker who finances client purchases of securities via margin loan is allowed by regulation to loan or pledge as collateral that client’s securities in an amount up to 140% of the cash debit balance. For example, if a client maintaining a cash balance of $50,000 buys securities having a market value of $100,000, the debit or loan balance will be $50,000 and the broker holds a lien on 140% of that balance or $70,000 of securities. Any securities held by the client in excess of that amount are referred to as excess margin securities ($30,000 in this example) and are required to be segregated unless the client provides IB the authorization to lend through the Stock Yield Enhancement Program.
The debit balance is determined by first converting all non-USD denominated cash balances to USD and then backing out any short stock sale proceeds (converted to USD as necessary). If the result is negative then we free up 140% of that negative number. In addition, cash balances maintained in the commodities segment or for spot metals and CFDs are not considered.
EXAMPLE 1: Customer is long EUR 100,000 in a USD Base Currency account with a EUR.USD rate of 1.40. Customer purchases USD denominated stock valued at $112,000 (EUR 80,000 equivalent). All securities are deemed fully-paid as cash balance as converted to USD is a credit.
| Component | EUR | USD | Base (USD) |
| Cash | 100,000 | (112,000) | $28,000 |
| Long Stock | $112,000 | $112,000 | |
| NLV | $140,000 |
EXAMPLE 2: Customer holds long USD of 80,000, long USD denominated stock of $100,000 and short USD denominated stock of $100,000. Long securities totaling $28,000 are deemed margin securities and the remainder of $72,000 excess margin securities. This is determined by subtracting the short stock proceeds from the cash balance ($80,000 - $100,000) and multiplying the resultant debit by 140% ($20,000 * 1.4 = $28,000)
| Component | Base (USD) |
| Cash | $80,000 |
| Long Stock | $100,000 |
| Short Stock | ($100,000) |
| NLV | $80,000 |
Will IB lend out all eligible shares?
There is no guarantee that all eligible shares in a given account will be loaned through the Stock Yield Enhancement Program as there may not be a market at an advantageous rate for certain securities, IB may not have access to a market with willing borrowers or IB may not want to loan your shares.
Are Stock Yield Enhancement Program loans made only in increments of 100 (similar to AQS)?
No. Loans can be made in any whole share amount although externally we only lend in multiples of 100 shares. Thus the possibility exists that we would lend 75 shares from one client and 25 from another should there be external demand to borrow 100 shares.
How are loans allocated among clients when the supply of shares available to lend exceeds the borrow demand?
In the event that the demand for borrowing a given security is less than the supply of shares available to lend from participants in our Yield Enhancement Program, loans will be allocated on a pro rata basis (e.g. if aggregate supply is 20,000 and demand is 10,000, each client will be eligible to have 50% of his/her shares lent)
Are shares loaned only to other IB clients or to other third parties?
Shares may be loaned to any counterparty and is not limited solely to other IB clients.
Can the Stock Yield Enhancement Program participant determine which shares IB can lend?
No. The program is entirely managed by IB who, after determining those securities, if any, which IB is authorized to lend by virtue of a margin loan lien, has the discretion to determine whether any of the fully-paid or excess margin securities can be loaned out and to initiate the loans.
Are there any restrictions placed upon the sale of securities which have been lent through the Stock Yield Enhancement Program?
Loaned shares may be sold at any time, without restriction. The shares do not need to be returned in time to settle your sale of the share and proceeds from the sale are credited to the client’s account on the normal settlement date. In addition, the loan will be terminated on the open of the business day following the security sale date.
Can a client write covered calls against stock which has been loaned out through the Stock Yield Enhancement Program and receive the covered call margin treatment?
Yes. A loan of stock has no impact upon its margin requirement on an uncovered or hedged basis since the lender retains exposure to any gains or losses associated with the loaned position.
What happens to stock which is the subject of a loan and which is subsequently delivered against a call assignment or put exercise?
The loan will be terminated on T+1 of the action (trade, assignment, exercise) which closed or decreased the position.
What happens to stock which is the subject of a loan and which is subsequently halted from trading?
A halt has no direct impact upon the ability to lend the stock and as long as IB can continue to loan the stock, such loan will remain in place regardless of whether the stock is halted.
Can the cash collateral from a loan be swept to the commodities segment to cover margin and/or variation?
No. The cash collateral securing the loan never impacts margin or financing.
What happens if a program participant initiates a margin loan or increases an existing loan balance?
If a client maintains fully-paid securities which have been loaned through the Stock Yield Enhancement Program and subsequently initiates a margin loan, the loan will be terminated to the extent that the securities do not qualify as excess margin securities. Similarly, if a client maintaining excess margin securities which have been loaned through the program increases the existing margin loan, the loan may again be terminated to the extent that the securities no longer qualify as excess margin securities.
Under what circumstances will a given stock loan be terminated?
In the event of any of the following, a stock loan will be automatically terminated:
- If the client elects to terminate program participation
- Transfer of shares
- Borrowing of a certain amount against the shares
- Sale of shares
- Call assignment/put exercise
- Account closure
Do participants in the Stock Yield Enhancement Program receive dividends on shares loaned?
While the lender of the securities is entitled to receive the amount of all dividends and distributions made on loaned securities, they may receive cash payments, commonly referred to PILs, in lieu of dividends. Depending upon ones holding period for the shares loaned, the receipt of a PIL may have an adverse tax impact for certain U.S. taxpayers as such payments are taxed as ordinary income rather than at the reduced rate associated with qualified dividends. IB will attempt to mitigate the payment of PILs by recalling shares prior to a dividend, however, IB cannot guarantee that the borrower will be able to return the shares within the necessary time frame to avoid PIL treatment.
Do participants in the Stock Yield Enhancement Program retain voting rights for shares loaned?
No. the borrower of the securities has the right to vote or provide any consent with respect to the securities if the Record Date or deadline for voting, providing consent or taking other action falls within the loan term.
How are loans reflected on the activity statement?
Loan collateral, shares outstanding, activity and income is reflected in the following 6 statement sections:
1. Cash Detail – details starting cash collateral balance, net change resulting from loan activity (positive if new loans initiated; negative if net returns) and ending cash collateral balance.
2. Net Stock Position Summary – for each stock details total Shares at IB, the number of Shares Borrowed, the number of Shares Lent (through AQS or the Stock Yield Enhancement Program) and the Net Shares (=Shares at IB + Shares Borrowed - Shares Lent). 
3. IB Managed Securities Lent – lists for each stock loaned through AQS or the Stock Yield Enhancement Program the Quantity of shares loaned, the Net Fee Rate (%) and the Collateral Amount. 
4. IB Managed Securities Lent Activity – details the loan activity for each security including Loan Return Allocations (i.e., terminated loans); New Loan Allocations (i.e., initiated loans); the share Quantity; the Net Fee Rate (%) and the Collateral Amount. 
5. IB Managed Securities Lent Activity Fee Details – details on an individual loan basis the Market Fee Rate (%); the Gross Lend Fee (represents the total fee charged to the borrower which is equal to {Collateral Amount * Market Fee Rate}/360); the IB Management Charge (equals 50% of the Gross Lend Fee); the Net Lend Fee Rate (represents the half of the Market Fee Rate which the client earns) and the Net Lend Fee (represents the client’s portion of the fee income. Equals the Gross Lend Fee - IB Management Charge).
Note: This section will only be displayed if the Net Lend Fee accrual exceeds USD 1 for the statement period. 
6. Interest Accruals – the loan fee income is accounted for here as an interest accrual and is treated as any other interest accrual (aggregated but only displayed as an accrual when exceeding $1 and posted to cash monthly). For year-end reporting purposes, this fee income will be reported as miscellaneous income on the Form 1099 issued to U.S. taxpayers.
MF Global Account Transfers
Interactive Brokers stands ready to accommodate current and former MF Global (MFG) customers interested in opening an account or transferring positions to IB. For those clients seeking to transfer cash and/or positions, please take note of the following:
Futures & Futures Options
The transfer considerations for commodity accounts varies by the region of the MFG entity in which the account is maintained and the clearinghouse in which the positions are cleared.
1. U.S. - The U.S. based commodities clearinghouses (OCC, CME, ICE, KCBOT, MGEX, Clear US & The Clearing Corporation) have already begun transferring positions to designated clearing firms on a bulk basis. This transfer process is scheduled to be completed by November 11, 2011. In the case of clients whose account has been subject to bulk transfer and who have already been contacted by their new firm, transfers can be initiated by completing and faxing a completed US Futures Transfer of Assets Form which is made available in the online application for new applicants and through Account Management for existing clients. To ensure a successful transfer, we recommend that you contact your current broker to ensure that your account is margin compliant prior to initiating the transfer.
If you have not yet been notified of an account transfer, you may send an email to clearinginformation@CMEGroup.com, an address established by the CME to assist MFG clients with tracking the status of their account. Inquiries submitted to this email address must contain your Name, MFG Account number, and the MFG Office or Branch code (if known). Click here for additional details as provided by the CME.
2. UK, Australia, Hong Kong & Singapore - The deadline to request transfers has reportedly expired and and positions which have not been the subject of a bulk transfer are likely to be liquidated by the trustee. Transfer requests submitted by IB prior to the deadline, however, will be honored. Clients who have not yet been contacted regarding the status of their accounts are advised to refer to the website links below for contact information for each of the respective clearinghouses or designated trustee.
UK (LCH.Clearnet)
Australia (Deloitte)
Hong Kong (KPMG)
Singapore (SGX)
Cash and Equity Securities
Securities account assets (e.g., cash, stock, bonds, options) held by MFG its affiliates are currently frozen. Clients should await contact from MFG or its Trustee Administrator with regards to the disposition of such assets.
To begin your application for a new account with Interactive Brokers, please click here
Selecting a billing account
Account holders who maintain multiple accounts which are linked together by a common may designate the account from which any monthly market data subscription fees are to be billed. This feature may be of benefit to individuals who wish to ensure that such fees are deducted from the account maintaining the greatest equity (to minimize the likelihood of a disruption in service due to insufficient funds and/or position liquidations to cover subscription fees) or are not deducted from accounts subject to contribution limits (e.g., IRAs).
To designate a billing account, you would need to first log in Account Management and select the Trading Access and then Market Data Subscriptions menu options. You will be presented with a screen similar to that below (Exhibit 1) which includes a drop-down list box of all accounts which are linked and from which a billing account may be designated. Select the desired account and then click on the 'Change Billing Account' button.
Exhibit 1
You will then receive the following message confirming your selection (Exhibit 2). Note that changes will take place effective with the next monthly billing cycle (market data subscriptions fees for a given month are generally deducted in the first week of the successive month).
Exhibit 2
Account holders should also pay special attention to the notice provided through the 'Explain' mouse over (Exhibit 3) which details certain limitations with respect to this feature. Also note that this designation feature only serves to designate the account from which market data subscription fees are to be deducted and has no impact upon other fees such as the monthly minimum activity fee, interest and commissions, all of which are billed to the account in which they are incurred.
Exhibit 3
ACATS Transfer Guide (US brokerage account transfers)
ACATS Transfer Guide
Introduction
Understanding the basic facts about transferring accounts between US brokerage firms can be help to avoid delays. Through this article and other Knowledge Database resources, Interactive Brokers seeks to assist with your incoming and outgoing ACATS requests.
US brokerage firms utilize a standardized system to transfer customer accounts from one firm to another. Known as the Automated Customer Account Transfer Service or ACATS, the process allows assets to move seamlessly between brokerage firms in a unified time frame. ACATS transfers are facilitated by a third party, the National Securities Clearing Corporation (NSCC), to assist participating members with timely asset transfers.
ACATS Transfer Benefits
The majority of assets may be transferred between US brokerage firms and some banks through ACATS. This standardized system includes stocks, US corporate bonds, listed options, unit investment trusts, mutual funds, and cash. Information on assets eligible for transfer is provided at "Assets Eligible..." Though impacted by multiple factors and time constraints, the accepted or rejected transfers finalize within 10 business days in most cases.
Navigating The Process
4 simple steps of the ACATS process will help you understand the flow and minimize delays. Familiarizing yourself with the transfer process helps to ensure a successful transition.
1. Incoming or Outgoing
Incoming ACATS Transfers
The financial institution that is receiving your assets and account transfer is known as the "receiving firm." Investors always work with and through the "receiving firm" to move full or partial account assets into a new broker.
Contact the "receiving firm" (Interactive Brokers) to review the firm's trading policies and requirements. You should verify that your assets are eligible for trading at the "receiving firm" before initiating the transfer request. Not all ACATS transferable assets are acceptable for trading at every brokerage firm.
Outgoing ACATS Transfers
All outgoing ACATS transfers, full or partial, must be approved by the "delivering firm." Investors, however, should work with and through the "receiving firm" in order to begin the the transfer process or to status the progress of the request.
2. Initiating Your Transfer
Investors must always begin the ACATS transfer with the "receiving firm." An ACATS transfer form or Transfer Initiation Form (TIF) must be submitted. The "receiving firm" takes your reqeust and communicates with the "delivering firm" via ACATS. The process begins with this request for transfer of the account.
For your Interactive Brokers Account, the transfer is usually submitted online. Video instruction on submitting the transfer is provided at "How to deposit funds via a full ACATS/ATON Transfer." or through Step-by-step instructions.
Note: Outgoing account transfers from your IB account should be directed to the other broker. Your request will be submitted to IB from the other broker through the ACATS electronically.
3. What to Expect
Your Account
Brokers ensure the safety and security of transfer requests by only authorizing requests between open accounts that meet the following criteria:
- Same Account Title
- Same Tax ID Number
- Same Account Type
Transfer Approval
Ultimately responsible for validating the transfer, the "delivering firm" may accept information from the "receiving firm" correcting data originally entered. Approved or validated requests result in the delivery of positions to the "receiving firm" for their acceptance. Assets may not be accepted by the "receiving firm" for the following:
- Non-marginable or Margin (credit) violation
- Not Tradable
- DTC Chill
Note: The most common reasons for ACATS rejections are outlined by clicking here.
Processing Time-frame
The processing time for each transfer request is fixed. In general, approved transfers complete within 4 to 8 business days. Almost all transfers complete within 10 business days. Each firm is required to perform certain steps at specific intervals in the process. Feel free to review the Full ACATS transfer process flow.
Fees
While Interactive Brokers does not charge a fee to transfer your account via ACATS, some brokers do apply a fee for full and partial transfers. Prior to initiating your transfer, you should contact the "delivering firm" to verify any charge.
4. Who To Contact For Help
Interactive Brokers Customer Service stands poised to assist with your incoming ACATS transfer reqeust. Click here for Customer Service contact resources.
Note: Outgoing or ACATS transfers sending accounts to another broker should be directed to the "receiving firm." Their Account Transfer Group will work with Interactive Brokers directly to complete your outgoing request.
Application considerations for Non-Resident Indians (NRI)
Overview:
Who or What is an NRI?
An Indian Citizen who stays abroad for employment, carrying on business, vacations outside of India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is considered a NRI. In addition, persons posted in U.N. organizations and officials deputed abroad by Central/ State Government and Public Sector Undertakings on temporary assignments are also treated as NRIs. Non-resident foreign citizens of Indian Origin are treated on par with Non-Resident Indian citizens. According to the Indian Government, anybody who resides outside of India for period of 182 days in a calendar year is considered a Non Resident Indian.
IB provides NRIs with trading access on the National Stock Exchange of India (NSE) through the IB-India subsidiary. Futures and Futures Options trading are available through the F&O Segment, however, at this time stock trading is not yet available.
In order to open an NRI account, applicants are encouraged to familiarize themselves with the identity documentation and bank account prerequisites outlined below.
Background:
1. Identity - PAN Card
The PAN (Permanent Account Number). is a ten-digit alphanumeric code generated by the India's 'Income Tax Department, This is required by anyone and everyone who wish to conduct any kind of financial transaction in India. If you do not have a PAN card you will need to apply for one before your trading account can be considered for opening. You can apply for a PAN card online though the Tax Information Network (TIN) of the Income Tax Department of India (see link below).
The following documentation will be required to complete the application, and is split into two categories, Proof Of Identity and Proof of Address none of which can be older than six months. PAN cards will ordinarilly be received within 15-25 business days.
1. Proof Of Identity (Copy of)
· Passport
· Drivers License
· Voted Identity Card
· Property Tax Bill
· Water Bill
· Credit Card Bill
· Bank Account Statement / Passbook
2. Proof of Address (Copy of)
· Electricity Bill
· Telephone Bill
· Credit Card Statement
· Employer Certificate
· Passport
· Ration Card
· Property Tax Bill
Applications can be done online by clicking on the following link for the Income Tax Department
of India,
https://tin.tin.nsdl.com/pan/index.html .
2. NRI Bank Accounts
Indian Regulations Require that customers must have a set of two Indian Bank Accounts, Ordinary Non-Resident Account in Rupees (NRO Main) and Ordinary Non Resident Account in Rupees, Portfolio Investment Scheme (NRO PIS). The second account is considered a sub of the main NRO Account. The functions for each account are described below:
Ordinary Non-Resident Account in Rupees (NRO Main):
· Received funds that have been converted from the home currency to NRI (Indian Rupees)
· Serves to provide the initial funding for the IB Account
· Funds can be used for initial stock trading
· Serves to receive the proceeds from futures and options trades
Ordinary Non Resident Account in Rupees, Portfolio Investment Scheme (NRO PIS)
· The account used to fund/withdraw monies to/from the IBI Brokerage account for stock purchased/sold, by the exact amount including IBI commissions and costs, after IBI has issued a contract note for the trade. This is required to satisfy Reserve Bank of India (RBI) Regulations when a NRO Main Account is Opened.
NRI Bank Accounts can be opened by any of the following major banks, most of which offer online application facilities.
Citi - http://www.online.citibank.co.in/
ICICI - http://www.icicibank.com/
HSBC - http://www.hsbc.co.in/1/2/
State Bank of India – www.statebankofindia.com
As another option customers can also a set of Non Resident External (NRE) accounts, these are not purely optional accounts, and are not required for trading in the Indian Markets through Interactive Brokers India. Please use the following link for additional information on this option :
http://www.interactivebrokers.co.in/en/accounts/individuals/nriFactSheet.php?
ib_entity=in
Other Links:
IB India Website- www.interactivebrokers.co.in
Tax Information Network (PAN Card Information) -
https://tin.tin.nsdl.com/pan/form49A.html
Overview of Fees
Clients and as well as prospective clients are encouraged to review our website where fees are outlined in detail. An overview of the most common fees is provided below:
1. Commissions - vary by product type and listing exchange and whether you elect a bundled (all in) or unbundled plan. In the case of US stocks, for example, we charge $0.005 per share with a minimum per trade of $1.00.
2. Interest - interest is charged on margin debit balances and IB uses internationally recognized benchmarks on overnight deposits as a basis for determining interest rates. We then apply a spread around the benchmark interest rate (“BM”) in tiers, such that larger cash balances receive increasingly better rates, to determine an effective rate. For example, in the case of USD denominated loans, the benchmark rate is the Fed Funds effective rate and a spread of 1.5% is added to the benchmark for balances up to $100,000. In addition, individuals who short stock should be aware of special fees expressed in terms of daily interest where the stock borrowed to cover the short stock sale is considered 'hard-to-borrow'.
3. Exchange Fees - again vary by product type and exchange. For example, in the case of US securities options, certain exchanges charge a fee for removing liquidity (market order or marketable limit order) and provide payments for orders which add liquidity (limit order). In addition, many exchanges charge fees for orders which are canceled or modified.
4. Market Data - you are not required to subscribe to market data through IB but if you do you may incur a monthly fee which is dependent upon the vendor exchange and their subscription offering. We provide a Market Data Assistant tool which assists in selecting the appropriate market data subscription service available based upon the product you wish to trade. To access, log into Account Management click on the Tools icon and then the IB Market Data Assistant link.
5. Minimum Monthly Activity Fee - as we cater to active traders we require accounts to generate a minimum in commissions each month or be charged the difference as an activity fee. The minimum is $10 per month for accounts maintaining a balance above $2,000 and $20 per month for accounts whose equity has fallen below $2,000.
6. Miscellaneous - IB allows for one free withdrawal per month and charges a fee for each subsequent withdrawal. In addition, there are certain pass-through fees for trade bust requests, options and futures exercise & assignments and ADR custodian fees.
For additional information, we recommend visiting our website at ww.interactivebrokers.com and from the Individuals page select the Fees menu option at the top of the page.
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.
- Select What's New for the 2009 Gain/Loss Summary Worksheet for a brief overview of new additions.
- Select 2009 Gain/Loss Summary Worksheet, General Explanation, for details on the columns and fields of the “Worksheet.”
- Select 2009 Gain/Loss Summary Worksheet, Considerations, for details about limitations and adjustments on the “Worksheet.”
- Select Tax Information and Reporting page, then click the Reports and Dates tab for the year-end tax form and worksheet calendar.
- Select IRS Publication 550 for a comprehensive explanation of the IRS guidelines for determining your gain/loss.
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.
2009 Gain/Loss Summary Worksheet: Considerations
Overview:
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.
Corporate Actions
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
Option Assignments/Exchanges/Expirations
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.
Short Sales
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.
Tax Basis Declaration
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.
Transferred Accounts
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.
Wash Sales
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.
