Tick Size Pilot Program
What is the Tick Size Pilot Program?
The national securities exchanges and the Financial Industry Regulatory Authority (FINRA) are implementing a Tick Size Pilot Program, which means some equities symbols will have trading restrictions effective October 3, 2016.
According to FINRA, the Tick Size Pilot Program will evaluate whether widening the tick size for securities of smaller capitalized companies affects trading, liquidity and market quality. The program comprises four groups of securities: a control group and three test groups. The three test groups have symbol restrictions and different trading behaviors.
What are the different Tick Size Pilot Program groups?
- The control group will be quoted and trade at its current tick size increment.
- The first test group will be quoted in $0.05 increments but will continue to trade at its current price increment.
- The second test group will be quoted and trade in $0.05 minimum increments but will allow certain exemptions for midpoint executions, retail investor executions and negotiated trades.
- The third test group will adhere to the requirements of the second test group but will also be subject to a “trade-at” requirement. There will also be exemptions for the “trade-at” requirement.
How will I know if my symbol is in a pilot group?
If your symbol has a restriction:
- In the TradeStation desktop platform, you will see an alert triangle and a Symbol Restrictions icon on the lower part of the Order Bar, as well as on the status bar at the bottom of the desktop. Hover over the icon to view a ToolTip with more information.
- In the TradeStation Mobile app, you will see an alert triangle next to the symbol. Hover over the icon to view a ToolTip with more information.
- In the TradeStation WebTrading App, you will see an alert triangle next to the symbol. Hover over the icon to view a ToolTip with more information.
How long will the symbol restrictions last?
The Tick Size Pilot Program commences on October 3, 2016, and is scheduled to last two years.
How will this affect my orders?
The TradeStation platform offers many advanced order-entry features, some of which could be affected by the changes implemented for the Tick Size Pilot Program.
To lessen the possibility of entering orders at unintended prices, please ensure that the preorder execution confirmation window is turned on (enabled) by right-clicking on the Order Bar, selecting Order Entry Preferences, selecting Equities and/ or Options and selecting Validations & Confirms. When placing an order, validate in the confirmation window that you are placing that order at the price you intended.
Please be aware of any symbol restrictions when making your analysis and trading decisions.
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Pattern Day Trading
How is a pattern day trading account defined?
Based on FINRA day trading rules, any properly qualified margin account that places four or more day trades within five business days is deemed to be a pattern day trading account.
Pattern day trading accounts must maintain an account net worth (both beginning day and real-time) of at least $25,000 USD. If the account net worth falls below $25,000, trading is restricted to closing transactions until the account equity is increased above $25,000.
What if my account net worth falls below $25,000 and I decide not to re-fund my pattern day trading account but want to continue trading with TradeStation?
On a one-time basis, you may elect to either:
- Open a non-pattern day trading margin account. Your account will be limited to no more than three opening transactions per day and no more than three day trades per five rolling business days. For example, if you made two day trades in the preceding four trading days, you will be permitted to place one new opening transaction (buy to open or sell to open) during the current trading day. You are still permitted to place as many closing transactions (sell to close or buy to close) as you would like during the current trading day
- Open a cash account. This account will allow you to place unlimited non-margined trades, provided your account has settled funds to place a trade. Remember that the settlement period for a stock sale is T+3 (three business days after trade date) and the settlement period for options sales is T+1 (one business day after trade date).
If my pattern day trading Account Net Worth falls below $25,000, why can’t I just reclassify the account as either a non-pattern day trading or cash account rather than opening a new account?
Once a pattern day trading account is classified as such, we do not permit you to reclassify it as another account type. Any opening transaction in a pattern day trade account could (upon its liquidation) be deemed a “day trade.” If we allowed this to happen after the account net worth falls below $25,000, your account would be subject to regulatory restrictions for up to 90 days. You must therefore either re-fund your pattern day trading account net worth above $25,000 to resume trading or open one of the “non-pattern day trading accounts” referenced above.
What if my non-pattern day trading account appreciates above $25,000 in account net worth?
If your non-pattern day trading account net worth appreciates above $25,000, the non-pattern day trading account limitations will still apply.
If you wish to trade without those limitations, you may transfer your equity back to the original pattern day trading account. TradeStation discourages and may elect to restrict excessive transfers between pattern day trading accounts and non-pattern day trading accounts.
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What account types does TradeStation offers?
TradeStation offers two types of equities accounts: margin and cash.
- Day trade qualified accounts (FINRA day trading rules, accounts above $25,000 equity)
- Non-day trade qualified accounts (accounts below $25,000 equity, trade restrictions)
- Day trade rules do not apply to cash accounts and accounts are not restricted to three opening trades/day minus prior four business days’ day trades.
- Must wait for sale proceeds to settle before they can be reused (three business days for equities, one business day for options)
- Clients may not sell short in a cash account
What kind of short sale inventory does TradeStation offer?
Through our securities lending division, TradeStation has built numerous relationships with various broker-dealers, giving clients access to a larger-than-normal number of equities for short sale.
What is the process for trading short sale equities?
If an equity is not “easy to borrow,” clients may contact the Equities Trade Desk and we will attempt to locate shares for you to short. A Trade Desk representative will enter your order on the platform. You will then be able to modify/cancel the order yourself. There is no additional charge for this service. Please visit our Contact Us page for Trade Desk hours and more information.
*Short-debit fees are applicable
What kinds of securities will I be able to trade electronically?
As a TradeStation client, you have the ability to trade securities on all listed exchanges (Nasdaq, Nasdaq BX, NYSE, NYSE AMEX, NYSE Arca, BATS, BATS Y, EDGX, and EDGA) as well as OTCBB and Pink Sheets securities.
Can I place multi-leg orders for options?
TradeStation connects and routes to all of the major options exchanges and allows clients to place options orders up to and including four legs.
What are the different levels of options trading approval?
- Level 1 – Writing covered calls
- Level 2 – Buying calls and puts, plus writing covered calls (cash covered puts for cash accounts)
- Level 3 – Call and put spreads, plus writing covered calls and buying calls and puts
- Level 4 – Uncovered put writing, plus call and put spreads, writing covered calls and buying calls and puts
- Level 5 – Uncovered call writing and straddles, plus uncovered put writing, call and put spreads, writing covered calls and buying calls and puts
How many buying power indicators do I have in my margin account(s), and how do they work?
You have three buying power indicators in your margin account(s), which work as follows.
Day Trading Marginable Equities Buying Power
- This indicator will ultimately determine new order approval, and therefore will prevent new orders from exceeding this figure.
- It is capped to the “Beginning Day Trading Marginable Equities Buying Power.”
- It reflects open and filled orders.
- This indicator acts on a 1:1 ratio for fully marginable securities only; it assumes a 25% margin requirement on the purchase, hence 4:1 leverage.
- It only replenishes or increases from closing day trades.
- It will not increase from the liquidation of positions held overnight.
Overnight Marginable Equities Buying Power
- This indicator reflects open orders, filled orders and account appreciation and depreciation.
- It will not prevent you from opening new positions, and therefore is an indicator of a possible margin call if day trades are not closed out before the end of the day.
- This indicator acts on a 1:1 ratio for fully marginable securities only.
Option Buying Power
- This indicator is capped to the lesser of 50% overnight buying power and/or 25% day trading buying power.
- It will determine your options order approval, and therefore prevent options orders from exceeding this figure.
- This indicator reflects open and filled orders.
How will my buying power be affected when purchasing equities with a higher margin requirement or a leveraged ETF?
Your day trade marginal equities buying power figure is based on the premise that the stock you are purchasing is set to the 25% day trade requirement. Certain equities, for risk-related reasons, may be set at a higher margin requirement (50%, 75%, etc.). Any equity that carries a margin requirement higher than the 25% day trade rate can be found on the Special Margin Requirements page in the TradeStation Client Center. To determine the dollar amount of a security that can be purchased or sold short, you can use the following formula:
Day Trade Buying Power (DTBP) x .25/SMR%
- You wish to purchase SKF, which carries a 60% requirement, and your current DTBP is $200,000. How much SKF can you purchase?
($200,000 x .25)/.60 = $83,333
You can purchase up to $83,333 worth of SKF.
- You wish to short SDS, which carries a 60% requirement, and your current DTBP is $350,000. How much SDS can you sell short?
($350,000 x .25)/.60 = $145,833
You can sell short up to $145,833 worth of SDS.
- You wish to short NUGT, which carries a 90% requirement, and your current DTBP is $500,000. How much NUGT can you sell short?
($500,000 x .25)/.90 = $138,888
You can sell short up to $138,888 worth of NUGT.
- You wish to long DRYS, which carries a 100% requirement, and your current DTBP is $300,000. How much DRYS can you sell short?
($300,000 x .25)/1.0 = $750,000
You can sell short up to $750,000 worth of DRYS.
What happens with my in-the-money options on the last trading day, before expiration, if I don’t have sufficient equity in the account to support a potential assignment/exercise?
Generally, options contracts that close in-the-money by $.01 or more on the last trading day before expiration will be auto-exercised. You must ensure that sufficient buying power is in the account if you plan on being exercised or assigned. Short option holders do not have any control over when assignments will occur; only the probability of such can be estimated. No options traders can know when stocks will be halted from trading or removed from Ex by Ex-automatic “in-the-money” exercise processing at the Options Clearing Corporation (see its website for memo releases).
If sufficient equity or buying power is not in the account, or if you wish to avoid taking possession of the underlying assets of an options contract that may lead to a highly margined transaction and substantial risk exposure, the options position or strategy may simply be unwound by taking market action before the expiration of trading. TradeStation reserves the right to close out any options position or deny an auto-exercise of such if an account has insufficient equity or buying power to collateralize the resulting transaction. Account owners are responsible for all options-related transactions and financial obligations in their accounts.
Can I trade short in a cash account?
No. Trading short is only allowed in margin accounts; therefore, if you are eligible to complete an application online, it is imperative that you apply for margin.
Note: All applicants using a paper application, if qualified, will automatically be given margin permissions. If you decide that you do not want a margin account, please contact an account representative at 800.808.9336.
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Equities Tax Reporting
When will I receive my tax documents from TradeStation?
Consolidated Form 1099s will be made available online for TradeStation equity accounts beginning in the first half of February. These documents may include Forms 1099-B, 1099-DIV, 1099-INT, 1099-MISC and 1099-OID, depending on activity within your account.
When are the important deadlines for the 2016 tax year?
April 17, 2017.
- This date represents the tax filing deadline established by the IRS. This is also the last day to contribute to an IRA account for the previous tax year. If you need to submit your tax return later than this date, you must file for an extension.
- The regular tax return filing deadline is April 15. However, due to April 15 falling on a Saturday, Tax Day is on the following Monday.
- To avoid late payment penalties and interest, any additional taxes you owe must be paid by this date, regardless of whether or not you filed an extension.
- Due date for the first installment of 2017 estimated tax payments.
April 24, 2017.
- If you did not file for an extension, this is the deadline for re-submitting your tax return, or paper-filing a rejected federal return that was originally e-filed by the April 17 deadline.
- Important Note: Although the last day to resubmit a rejected return is October 21, the April 24 deadline applies to taxpayers who owe taxes and want to avoid the late-filing penalty.
- Deadline for re-submitting or paper-filing a rejected extension that was originally e-filed by the April 17 deadline.
June 15, 2017.
- Deadline for filing a personal tax return for U.S. citizens or residents living and working abroad, including military duty.
- Due date for the second installment of 2017 estimated tax payments.
September 15, 2017.
- Final deadline for filing a 2016 tax return for a corporation, S corporation, or partnership, if you elected to file an extension.
- Due date for the third installment of 2017 estimated tax payments.
September 30, 2017.
- Final deadline to file your estate/trust tax return for the 2016 calendar year, if you elected to file an extension.
October 16, 2017.
- Final deadline for filing a 2016 personal or C corporation tax return, if you elected to file an extension.
October 21, 2017.
- Final deadline to resubmit a rejected tax return that was originally e-filed on or before October 16.
- If you’re expecting a refund and miss the October 21 e-file cutoff date, you have until April 15, 2020 (October 15, 2020 if you filed an extension) to file a paper return and claim your 2016 refund.
January 16, 2018.
- Due date for the fourth installment of 2017 estimated tax payments.
Can I access my TradeStation tax documents online?
Yes. Once posted, you can access your Consolidated Form 1099 through the TradeStation Client Center:
- Log in to the Client Center
- Select Accounts from the main navigation menu
- Expand Equities Accounts in the left navigation menu
- Select Account Statements from the left navigation menu.
View this video to learn how to download your TradeStation trading activity for tax preparation.
Does TradeStation offer a discount on tax software?
Yes. TradeStation clients may save up to $15 on the purchase of TurboTax® software. This special offer is made possible through our partnership with Intuit, Inc. Learn more.
How do I import my TradeStation account information into TurboTax® (Installed Version)?
TradeStation clients may import equities dividend, interest, and buy/sell information directly into TurboTax. If you need to report Section 1256 Contracts, such as regulated futures contracts, foreign currency contracts, or non-equity options they must be manually entered. Wash sales will be calculated after import.
- Locate your Consolidated Form 1099. If you need to download a copy online, click here.
- Open TurboTax and display your tax return.
- Click the File menu.
- Select Import, then From Financial Institution.
- In the search box provided, type TradeStation to locate and select TradeStation in the lower window (it will stay highlighted), and then click the Continue button.
- Type your 8-digit TradeStation Account Number and the 11-digit alphanumeric Document ID included at the top of your Consolidated Form 1099, and click Continue.
- Make sure to check all of the checkboxes under These documents are Now Ready for Import, and click Import Now.
- Click the Done button at the bottom of the Import Summary screen.
View this video to learn how to import your TradeStation trading activity into TurboTax.
How do I import my TradeStation account information into TurboTax® (Online Version)?
TradeStation clients may import equities dividend, interest, and buy/sell information directly into TurboTax. If you need to report Section 1256 Contracts, such as regulated futures contracts, foreign currency contracts, or non-equity options they must be manually entered. Wash sales will be calculated.
Locate your Consolidated Form 1099. If you need to download a copy online, click here.
Log in to your online TurboTax account and display your tax return.
Click the Federal Taxes menu item in the left-hand sidebar, click Wages & Income, and then click I’ll choose what I work on.
Browse to the Investment Income section.
Click the Start button next to Stocks, Mutual Funds, Bonds, Other.
When prompted, if you sold any investments during the tax year, select Yes.
In the search box labeled Import from my bank or broker, type TradeStation, then select TradeStation, and click Continue.
Type your 8-digit TradeStation Account Number and the 11-digit alphanumeric Document ID included at the top of your Consolidated Form 1099, and click Continue.
Make sure to check all of the checkboxes to ensure all of the data available is imported and click Import Now.
Click the Done button at the bottom of the Import Summary screen.
View this video to learn how to import your TradeStation trading activity into TurboTax.
How many positions can I import into TurboTax®?
Within TurboTax, a position is represented by a record of the opening and closing information for that position. Typically, this comprises two trades (a buy and a sell). TurboTax limits the number of records that can be imported to approximately 2,500 within the installed/desktop version, and to approximately 500 within the online version. While importing your account information into TurboTax, if more than the maximum number of records are detected, you will receive notification and further instruction within the TurboTax interface.
How do I edit the TradeStation account information I imported into TurboTax® (Installed Version)?
If you need to edit imported data:
- Open TurboTax and display your tax return.
- Click the Federal Taxes tab.
- Click Wages & Income.
- Click I’ll choose what I work on in the middle of the page.
- Scroll down to the Investment Income section.
- Click Start or Update to the right of Stocks, Mutual Funds, Bonds, Other.
- Click Edit to the right of the transaction, and click Continue on the next screen.
- Select Edit and make any necessary changes.
- Scroll to the bottom, and click Continue.
What are Section 1256 contracts?
Section 1256 contracts claim a profit/loss based on year-end value, even though the contracts haven’t been closed. Examples of Section 1256 categorized contracts include:
- Regulated futures contracts
- Foreign currency contracts
- Non-equity options
- Dealer equity options
- Dealer securities futures contracts.
How do I know if I have Section 1256 contract activity to report to the IRS?
If you have trading activity in your TradeStation equities account that is classified as a Section 1256 contract, it will be displayed in the Regulated Futures Contracts summary on your Consolidated Form 1099. It is important to note that if you choose to import your account data into tax preparation software, this information will not be included. To complete you tax return, you will need to enter these activities manually.
How do I enter Section 1256 contract information into TurboTax?
When you import your TradeStation account information into TurboTax, your Section 1256 transactions will not be included. In order to report any Section 1256 contracts you may have, simply complete the following steps within TurboTax:
- Open TurboTax and select your tax return.
- Click the tab titled Federal Taxes, and then select Wages & Income.
- Click the button I’ll choose what to work on.
- Under the Investment Income section, locate the section titled Contracts and Straddles and click the Start button provided.
- When prompted by the question Any Straddles or Section 1256 Contracts?, click Yes.
- Select any special elections that may apply to you.
- On the Contracts and Straddles page, choose the box next to the Section 1256 Contracts marked-to-market.
- Select how you would like to enter your transactions.
If you require further assistance with reporting your Section 1256 contracts to the IRS, please contact a qualified tax advisor.
Can I import my TradeStation account information into other tax preparation software programs like those from TaxAct®, H&R Block®, and Tax Slayer®?
Yes. Once posted, you can download tax activity for your TradeStation equities account through the TradeStation Client Center.
- Log in to the Client Center
- Select Accounts from the main navigation menu
- Expand Equities Accounts in the left navigation menu
- Select Tax Center from the left navigation menu
- The following formats can be exported:
- QIF (GainsKeeper)
- CSV (TradeLog, TaxAct)
- OFX (Trade Accountant)
- QFX (TurboTax)
What are the most common tax forms I might encounter, and what do they report to the IRS?
About this Document
|Consolidated Form 1099
||This document provides a record of reportable income and transactions for the tax year. The consolidated Form 1099 may include forms 1099-B, 1099-DIV, 1099-INT, 1099-MISC, and 1099-OID depending on the account activity.
||This document details all sales transactions, cover short transactions, redemptions, tender offers, and mergers for cash.
||This document provides a summary of stock or mutual fund dividends received, mutual fund capital gains distributions, and any non-taxable distributions. Additionally, the document details any federal and foreign tax withheld.
||This document provides a record of interest income earned if total interest earned was $10 or more. Additionally, the details any federal and foreign tax withheld.
||This document reports an end-of-year summary of all non-employee compensation. Common examples include royalties, rent, self-employment income, and several other forms of miscellaneous income.
||This document is used to report original issue discounts on corporate bonds, certificates of deposit (CDs), collateralized debt obligations (CDOs), and U.S. government obligations.
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PLEASE NOTE: The information provided in this section is general in nature and should not be considered tax advice. For more information regarding tax matters, please consult your tax advisor.
What is cost basis?
Cost basis is the original price of an asset, usually the purchase price plus commissions. In addition, adjustments for wash sales, stock splits, spinoffs and other corporate actions may be made during the time the asset is held by a customer. Upon sale of the asset, costs for commissions and fees are deducted from the proceeds. The cost basis is used to calculate capital gains and losses, depreciation and return on investment.
Why does TradeStation report cost-basis information to the IRS?
As mandated by the Emergency Economic Stabilization Act of 2008, TradeStation is responsible for reporting to the IRS its customers’ cost basis and short- and long-term gains or losses on the customers’ Consolidated Form 1099-B. This is intended to simplify year-end tax preparation, as Form 1099-B provides a complete, accurate accounting of the cost basis and gains/losses for the year. TradeStation is not responsible for reporting to the IRS cost basis and gain/loss information for equity positions purchased before January 1, 2011.
How does cost-basis reporting affect Form 1099-B?
Form 1099-B reports a sale’s gross proceeds less commission. Brokerage firms are required to communicate cost-basis information to one another, so equity purchases made in the current tax year and transferred to TradeStation should be transferred with the cost-basis information. The 1099-B now shows the following additional information below for covered securities:
- The disallowed loss amounts due to wash sales.
- The designation of long- or short-term gain or loss.
- The cost basis for securities sold, corporate actions and adjustments for wash sales.
What is a tax lot?
A tax lot is established whenever you open a new position via a purchase or short sale in a security. You can have multiple tax lots within the same security as a result of multiple purchases, or you can have a single tax lot within the same security as a result of a partially filled order.
What is a tax lot relief method?
A tax lot relief method determines the selection of which lots of a security will be liquidated first in a given transaction. In addition to selecting which lot of a security will be sold, it also identifies the associated cost basis and holding period, which are used in computing the gain or loss, and whether or not it is long term or short term. When considering specific tax strategies, you need to be aware of the potential tax consequences of your trading activity for the entire year. There may be benefits to applying a different tax lot relief method in different accounts, or in the sale of some specific covered positions.
What tax lot relief methods does TradeStation support?
The default lot relief method for all asset classes is first-in, first-out (FIFO). We are required by law to apply FIFO unless you specifically instruct us to use another method. The following lot relief methods are available:
- First-in, first-out (FIFO) – This method assumes that the shares sold were the first shares purchased.
- Last-in, first-out (LIFO) – This method assumes that the shares sold were the last shares purchased within the account.
- High cost – This method assumes that those shares sold first are the highest-cost shares.
- Low cost – This method assumes that those shares sold first are the lowest-cost shares. This method does not consider the length of time the shares were held.
- Hand chosen – This method assumes the account owner will identify the specific shares that are sold.
- Average – This method keeps a running tally of the average cost of security shares that are purchased or sold over time, including reinvested dividends. Typically, this method is only available for qualifying mutual funds and most ETFs. It is important to note, however, that once you sell shares of a security using the average cost method, any remaining shares are also locked into that method. However, the method can be changed for any new shares purchased after that sale.
You may configure the default lot relief method to be used for each security type (stocks, ETFs, options, and mutual funds) within each account, as well as per position, using the Gain/Loss Tax Management feature in the Client Center.
How do I change the default tax lot relief method for each security type?
The default tax lot relief method for all asset classes is first-in, first out (FIFO). However, if you prefer to set a different tax lot relief method for a given security type (stocks, ETFs, options, or mutual funds) you can do so through the Gain/Loss Tax Management feature in the Client Center.
- Within the Gain/Loss Tax Management feature, click the Lot Relief Methods tab.
- In the box titled Lot Closing Settings, click the Change button.
- Under the section titled Default Methods, select the new default tax lot relief method desired for each asset type.
- If you prefer to use the Average method, when supported by the security, you must select the option titled Use Average instead of the defaults above under the section titled Average Eligible Securities.
How can the Gain/Loss Tax Management feature help me with tax reporting?
The Gain/Loss Tax Management feature in the Client Center can help you track and manage your realized and unrealized gains/losses throughout the year. You can use it to generate specific reports to assist you in filing your tax return. View this video to learn how to use the tool to monitor and optimize your tax position.
Can I use FIFO as the cost basis for my mutual funds?
What is the deadline for electing to report cost basis for mutual funds on a FIFO method?
Clients have until December 31, 2017, to inform TradeStation that they are electing to report their mutual funds’ cost basis using a FIFO method. We will adjust the data for trades placed in 2017, but not for those made prior to the 2017 tax year. Send your notification via email to firstname.lastname@example.org.
Or mail to:
ATTENTION: Client Services – Mutual Funds FIFO Method
8050 SW 10th Street, Suite 2000
Plantation, FL 33324
Please provide the following information:
Joint Name (if applicable):
I/We wish to elect the first-in first-out (FIFO) method of cost accounting for the mutual fund covered shares held in the accounts listed below. List account number(s) covered by your selection:
How do I change the tax lot relief method for a position?
The default tax lot relief method for all asset classes is first-in, first out (FIFO). However, if you prefer to set a different tax lot relief method for a given security type (stocks, ETFs, options, and mutual funds) you can do so through the Gain/Loss Tax Management feature in the Client Center.
- Within the Gain/Loss Tax Management feature, click the Lot Relief Methods tab.
- In the box titled Closing Transaction Log, find the position for which you want to adjust the lot relief method, and click the Edit link.
- Change the lot relief method as desired and save your changes.
Where can I view the individual tax lot information for my positions?
You can view the tax lot information for both your open and closed positions through the Gain/Loss Tax Management feature in the Client Center. For each security a summary row is provided that, once expanded using the (+) icon, will display information about the individual underlying lots.
How are transferred securities handled?
TradeStation is not responsible for, nor required to provide, cost basis for non-covered positions transferred into your TradeStation account. In addition, TradeStation is only required to report cost basis for covered securities purchased on or after January 1, 2011, and transferred into your account if the transferring firm provided valid cost-basis information.
How can I edit the cost basis of a transferred position?
You can edit the cost basis of your unsettled transferred positions or unsettled uncovered positions under the Tax Lot Transfers tab of the Gain/Loss Tax Management feature in the Client Center.
- Under the Tax Lot Transfers tab, you will be provided with the total quantity for each lot within the account selected.
- To adjust a lot, click the Edit link under the Actions column. Enter the total cost basis for the lot, including any commissions/fees paid. This will be used to calculate your total gain or loss. If you are entering the cost basis for a short position, the information will need to be entered as a negative. The transaction date should be the date the opening transaction took place.
- To enter information for another lot, click the Add Another Row link and repeat the steps above. As you add rows, the quantity of shares entered will be automatically calculated and validated against the expected total.
- Once you have assigned a cost basis for all shares and are ready to save, click the Save Changes. Click the Cancel link if you wish to undo your changes.
- You will be served a confirmation summarizing the information you entered. After verifying the information, click on Submit to save.
- You will be returned to the summary of your lots with the changes applied. The revised information will be used to calculate your future gains and losses.
Who is not subject to cost-basis reporting?
Non-resident aliens with a W-8 on file and C corporations are not subject to cost-basis reporting. S corporations are subject to cost-basis reporting.
What are "covered" securities?
Covered securities are those for which TradeStation is responsible for reporting to the IRS gain/loss and cost-basis information. This includes all securities you purchased on or after January 1, 2011, with the exceptions of fixed-income and options securities, which were covered effective January 1, 2014.
What are "non-covered" securities?
Non-covered securities are those for which TradeStation is not responsible for reporting to the IRS. They include any positions established prior to January 1, 2011.
What are realized and unrealized gains/losses?
Your unrealized gains and losses are the difference between the current price of the positions you hold and their purchase price, reflecting how much the positions have gained or lost since you bought them. If you close one of these positions, the gain or loss will become realized, or completed.
What is a capital gain?
When you sell an asset at a higher price than you paid for it, the difference between the purchase price and the sale price is your capital gain. For example, if you buy 100 shares of stock for $20 a share and sell them for $30 a share, you realize a capital gain of $10 a share times 100 shares, or $1,000. If you own the stock for more than a year before selling it, you have a long-term capital gain. If you hold the stock for less than a year, you have a short-term capital gain.
What is a capital loss?
When you sell an asset for less than you paid for it, the difference between the purchase and sale prices is your capital loss. For example, if you buy 100 shares of stock at $30 a share and sell them at $20 a share, you will realize a capital loss of $10 a share times 100 shares, or $1,000.
How does TradeStation calculate gains and losses?
TradeStation has opted to use the IRS default method of first-in, first-out (FIFO) and specified lot. The first method, FIFO, means that shares purchased first are sold first.
What is a wash sale?
A wash sale is the result of selling a security at a loss and buying it back within 30 days of the sale date or purchasing it within 30 days prior to the sale date. The total wash sale period is 61 days: 30 days before the sale date and 30 days after.
What is the result of a wash sale?
The loss that would have been incurred for the shares sold is disallowed and added proportionately to the basis of the replacement shares. In addition, the holding period for the shares you sold is added to the holding period of the replacement shares. The disallowed loss will be obtained when the replacement shares are sold.
How are wash sales reported?
TradeStation reports wash sales for identical covered securities (same CUSIP) purchased and sold in the same account. In addition, wash sales do not need to be reported for securities transferred in or between accounts within TradeStation. Clients should report on substantially identical securities across accounts for covered and non-covered securities, as they always have.
Can a client opt out of wash sale reporting?
As a part of the Emergency Economic Stabilization Act of 2008, TradeStation is responsible for reporting its customers’ cost basis, short- and long-term gains or losses and wash sales to the IRS via the revised Form 1099-B. Previously, we were required to report only the gross proceeds less commissions of a sale.
TradeStation is not required to report wash sales for accounts for which you made a valid “mark-to-market” election under IRS code section 475(f)(1).
Please consult with your tax advisor and/or refer to Publication 550 (Investment Income and Expenses) on how to make the mark-to-market election with the IRS. Once you receive confirmation of your election from the IRS, notify TradeStation, in writing (email is acceptable), of the identity of your TradeStation accounts as solely containing securities subject to the election. If you made such an election with the IRS and you fail to notify us, we will report your wash sales, possibly subjecting you to income tax reporting discrepancies.
Upon receipt of your election under IRS code section 475(f)(1), we will refrain from reporting wash sales in the referenced account(s) for future tax years unless and until you subsequently inform us, in writing (email is acceptable), that the election no longer applies to you or to the account(s). If so informed, we will prospectively report wash sales for your account(s).
Please download, complete and submit the Mark to Market Election – Exclude Wash Sale form to opt out of wash sale reporting, subject to qualification.
Is cost basis reported for IRA accounts?
For the current tax year, TradeStation will not be reporting cost basis for IRA accounts to customers or the IRS. Cost basis may be reported to customers for informational purposes, but as this is not currently required by the IRS, cost-basis pages will only display IRA cash balances.
For mutual funds, TradeStation uses average cost as its default cost-basis accounting method. If you wish to use the average cost method, no action is required at this time. Average cost for an account is calculated by adding up the cost of all covered purchases in the account (made after January 1, 2012) and dividing that total by the number of covered shares in the account. Under the average cost method, shares are redeemed in first-in first-out order, but the cost basis for all shares will be the calculated using average cost. TradeStation also provides FIFO as a cost-basis accounting method as an option for mutual funds. For more information, please contact your tax adviser or accountant.
For ETFs, TradeStation uses FIFO as its default cost-basis accounting method.
Where can I download a copy of my gain/loss statements?
Gain/loss statements with or without wash sale adjustments for the current year, as well as several previous years, are made available to view or download as PDF files under the Reports tab of the Gain/Loss Tax Management feature in the Client Center.
Where can I view or download a copy of my current year-to-date 1099 report?
Year-to-date (YTD) 1099 reports are made available to view or download as a PDF and XLS (Microsoft Excel) file under the Reports tab of the Gain/Loss Tax Management feature in the Client Center. Two types of YTD 1099 reports are provided: a standard 1099 summary statement, and a detailed 1099 statement.
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