<p>“got the free version of TurboTax which doesn’t do stocks - I offered to let him use my TurboTax installation to figure out his stock stuff. BTW, he’s fairly well off and can afford TurboTax - he’s just cheap. Like me. Of course I have my limits on being cheap.”</p>
<p>:)</p>
<p>Maybe I should get turbo tax…</p>
<p>There is a turbo tax for options?</p>
<p>I looked through some transactions on the detail report and some things that are called wash sale transactions were completely closed out before the end of the year so they shouldn’t be counted as having a tax effect.</p>
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<p>I will find out next year. I hope to just have TurboTax suck everything in and figure it all out.</p>
<p>Ok…</p>
<p>Went to my accountant to handle a 1041 return yesterday. I just found out that turbo tax business is able to do this form. The account is with Schwab. Looking through the stuff today, I realized that Schwab unlike Etrade and perhaps other brokerages does not include options in their 1099composite. Its included in their year end summary. So a loss is now a significant gain because of wash sale rules etc and the tax forms have to all be done over. Anybody have any idea why they do this? It also took my accountant quite a while to get his software to be able to input mlp info into the 1041 form.</p>
<p>[Active</a> Trader: Traders face new tax-reporting requirements and problems with 1099-Bs](<a href=“http://www.activetradermag.com/index.php/c/The_Business_of_Trading/d/Traders_face_new_tax-reporting_requirements_and_problems_with_1099-Bs]Active”>http://www.activetradermag.com/index.php/c/The_Business_of_Trading/d/Traders_face_new_tax-reporting_requirements_and_problems_with_1099-Bs)</p>
<p>Because options don’t have to be included in the 1099s until 2013.</p>
<p>I’m very impressed. I just got off the phone with Schwab and you’re correct. However my etrade acct has it. So do I have to put this stuff in my taxes this year? The Schwab person tonight wouldn’t commit to an answer</p>
<p>Thanks for that article. I forwarded it to my friend.</p>
<p>I thought that I was done with my Federal taxes but I wasn’t able to get through my one MLP investment so I flushed everything from Fidelity and Ameritrade and am doing them over. I also wasn’t able to get the Foreign Tax Credits right so I will be redoing them. We desperately need tax simplification when these incredibly sophisticated tax programs can’t get it right.</p>
<p>BTW, I didn’t have any problems (that I know of) with Wash Sale rules. I had one Wash Sale to deal with and it was from an ESPP sourced-sale from 2010 and I entered that with no problems. It is possible that there are problems but at this point, I don’t care and can just eat taxes on gains that I might not have. I think problems are unlikely as I didn’t have a lot of transactions in 2011.</p>
<p>I’m not certain I understand the article - actually I don’t. Unfortunately I don’t want to have to even think about it. How anybody could ever want to be an accountant is beyond me.</p>
<p>I love reading about and finding clever ways to reduce/manage taxes, but things have gotten so complex that I gave up on doing it years ago. One C-corp, several LLCs, a trust, foreign income, rental and royalty income, lots of K-1s, all combined with tax forms that are impenetrable. I just asked around for someone who was good and proactive but not overly aggressive about finding ways to reduce taxes and have been very happy devoting my time to making money (or being with my family). Now when I read about tax reduction strategies or new laws that might create opportunities, I call him.</p>
<p>^^ Agree. There are just some things it’s worth paying a professional to do.</p>
<p>Yes, I don’t mind paying our accountant to do our S Corp and personal taxes. Although it is a little annoying that he used to charge the same hourly rate that we did (as structural engineers) in 1999, and our rate has gone up 38% since then, while his has gone up more than 100%.</p>
<p>Doct… ;).</p>
<p>So…Doct…you are telling me that the 1099s from e- trade are correct?</p>
<p>Schwab, in some cases, where stocks were traded and options were used to hedge…have incorrect sales prices…incorrect costs… the wash sales are wrong…a triple threat…that leads to incorrect profit and loss statements…</p>
<p>Wonderful…</p>
<p>Doct…Your accountant needs to answer your question about how to
handle options on your return…</p>
<p>I may have to look at using an accountant next year or curtail certain types of investments. I don’t like what I’m hearing about options seeing as I just started writing them this year.</p>
<p>I haven’t used an accountant for a long time.</p>
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<p>My MLP thing is related to a lousy $145 in dividend income and the complexity is in assigning the right expenses. I actually don’t care about the expenses. I don’t really even care about the income. Spending an hour to save taxes on $145 in income is ridiculous.</p>
<p>The Foreign Tax Credit stuff - that’s quite a bit more money - worth an hour or two of time figuring it out. Then I have to do the FBAR stuff. I need to get this all done tonight so I can start on my NH stuff - I have to call the NH DOR and then send them a letter to get a credit from 2008 allocated to my 2010 return so that the remainder can then be allocated to my 2011 return. I need to call them for the address to send the letter to.</p>
<p>Where’s all of that great tax simplification that candidates are always talking about?</p>
<p>BCEagle91…</p>
<p>I have to tone things down a little… :)</p>
<p>I am going to need a little cooperation from the brokerage firm…</p>
<p>The numbers are sooooooooooooo off.</p>
<p>I completely understand. 1099-Bs can contain some truly huge numbers (I’ve had them with over a billion dollars before) and I would be working pretty hard if TurboTax said that I owed $20 million in taxes. I’m just fortunate that I didn’t have a lot of trades last year when the new regulations hit.</p>
<p>BTW, I think that I need to call my brokers to ask them if I’m on FIFO or Average Cost. I think that I’d be better off with FIFO as it is simpler accounting-wise even though I might wind up paying more in taxes. If they defaulted me to Average Cost, then I may just start a policy of going completely to cash in late November to avoid all of this stuff.</p>
<p>“I completely understand. 1099-Bs can contain some truly huge numbers (I’ve had them with over a billion dollars before) and I would be working pretty hard if TurboTax said that I owed $20 million in taxes. I’m just fortunate that I didn’t have a lot of trades last year when the new regulations hit.”</p>
<p>Well those numbers are larger than mine. :)</p>
<p>When I was mark to market…I tried to keep my positions smaller in December…</p>
<p>Schwab defaults to FIFO…</p>
<p>I used to do 1,000 to 1,500 transaction per year. I did 88 in 2011. It makes life easier - especially if you’ve got a lot of other things in life going on which I did last year. It makes the 1099-Bs much, much smaller.</p>
<p>Good for Schwab.</p>
<p>I just checked Fidelity. It appears that the law only allows the Average Cost method to be used for Mutual Funds and DRIPs so it looks like I am fine with my Ameritrade and Fidelity accounts. Using the Average Cost method in general would appear to me to be an accounting nightmare.</p>
<p>With FIFO, at least one can reasonably track a security - the problem is when you have a ton of transactions in one security that you have to track - the term “bleary-eyed” comes to mind. This is when you’ll pay $300 for software or $500 for an accountant to make it all go away.</p>
<p>I’m tired of this nonsense. I think from now on, most of my trading is going to be in my ira. Unfortunately most of my money is not in tax sheltered accounts.</p>
<p>I’m not going to stop trading but I’m going to be a little more careful in the securities that I choose and in the timing to minimize wash sales. The Foreign Tax Credit stuff is mostly just bank accounts in foreign countries - not trading related but it is still a pain.</p>
<p>Maybe I should buy some INTU - if they can make this painless for their customers, then they’re going to get a lot of traders beating a path to their online door.</p>