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How trade matching and wash sale works
Let us assume an active trader made the following trades
  1. Buys 500 shares of ABC Corp. for $20 per share on 03/12
  2. Sells 234 shares of ABC Corp for $18 per share on 03/14
  3. Buys 300 shares of ABC Corp for $16 per share on 03/15
  4. Sells 66 Shares of ABC Corp for $19 per share on 03/16
  5. Sells 250 Shares of ABC Corp for $22 per share on 03/19
  6. Sells 150 Shares of ABC Corp for $20 per share on 03/19
  7. Buys 200 shares of ABC Corp for $18 per share on 03/21
  8. Sells 300 Shares of ABC Corp for $22 per share on 03/22

Based on the above transactions can you tell which sell orders correspond to which buy orders? What if you have 1000 such transactions? According to the IRS, in most circumstances you should use First In First Out (FIFO) order matching. In the above example FIFO requires matching Trades 2, 4 and 5 with Trade 1. The remainder (50 shares) of Trade 5 is then applied to Trade 3 along with all of Trade 6 and 100 shares of Trade 8. Not so easy!

Moreover, most Brokerage firms don't even provide stock purchase transaction information when they send Form 1099, consequently forcing you to use your trade history to figure out the cost basis for each trade. Do you have time to do all these mappings and compute the cost basis for each trade? With Simply Track you can do it with a click of the mouse.


If you import the above trades in to Simply track and this is what you get!



Ticker Shares Buy Date Buy Price Sold Date Sold Price Value Cost Net Gain/Loss Net Gain/Loss %
ABC 234 3/12/2004 20.00 03/14/2004 18.00 4,212.00 4,680.00 -468.00 -10.00%
ABC 66 3/12/2004 20.00 03/16/2004 19.00 1,254.00 1,320.00 -66.00 -5.00%
ABC 200 3/12/2004 20.00 03/19/2004 22.00 4,400.00 4,000.00 400.00 10.00%
ABC 50 3/15/2004 16.00 03/19/2004 22.00 1,100.00 800.00 300.00 37.50%
ABC 150 3/15/2004 16.00 03/19/2004 20.00 3,000.00 2,400.00 600.00 25.00%
ABC 100 3/15/2004 16.00 03/22/2004 22.00 2,200.00 1,600.00 600.00 37.50%
ABC 200 3/21/2004 18.00 03/22/2004 22.00 4,400.00 3,600.00 800.00 22.22%
Totals 20,566.00 18,400.00 2,166.00  

Wash Sale

Remember, just matching your sell trades with buy trades is not enough; according to the IRS you should report all wash sales as well, meaning those transactions where you buy substantially identical securities within 30 days before or 30 days after the sale. Losses resulting from wash sale transactions may not immediately be claimed for tax purposes. The one good thing about wash sales is that you may get to claim the loss in a later tax year if you do not have substantial gains. The disallowed amount is always added to the cost of the repurchased stock, so the wash sale loss can be claimed when the security is later sold.

Simply Track generates wash sale reports with a click of the mouse to make sure you get the correct tax credit allowed from wash sale adjustments. For the above sample trades you get the following report obviating some really complex computations:

Ticker Shares Buy Date Sell Date Value Cost Net Gain/Loss
ABC(L) 234 03/12/2004 03/14/2004 4,212.00 4,680.00 -468.00
Wash Sale Adj - 66 03/12/2004     -132.00 132.00
Wash Sale Adj - 168 03/12/2004     -336.00 336.00
ABC(L) 66 03/12/2004 03/16/2004 1,254.00 1,452.00 -198.00
Wash Sale Adj - 32 03/12/2004     -96.00 96.00
Wash Sale Adj - 34 03/15/2004     -102.00 102.00
ABC(L) 200 03/12/2004 03/19/2004 4,400.00 4,432.00 -32.00
Wash Sale Adj - 16 03/15/2004     -2.56 2.56
Wash Sale Adj - 150 03/15/2004     -24.00 24.00
Wash Sale Adj - 34 03/15/2004     -5.44 5.44
ABC(L) 50 03/15/2004 03/19/2004 1,100.00 904.56 195.44
ABC(L) 150 03/15/2004 03/19/2004 3,000.00 2,424.00 576.00
ABC(L) 100 03/15/2004 03/22/2004 2,200.00 1,605.44 594.56
ABC(L) 200 03/21/2004 03/22/2004 4,400.00 3,600.00 800.00
 
Total Gain/Loss 2,166.00
 
Grand Totals 20,566.00 18,400.00 2,166.00

Best way to learn about Simply Track is downloading Trail Copy and try it. If you dig into the details, you will find Simply Track either meets or exceeds the key functionality of the competitive products. It is by far the best value you will find!

Simply Track Highlights

  • Automatically imports trades from your online brokerage house(s). Simply Track comes with an excellent importing feature which saves lots of time over manually entering your trades.
  • Handles an unlimited number of transactions (unlike other stock tracking programs).
  • Adjusts your stock splits automatically so that you don't need to do this by hand.
  • Automatically does FIFO trade matching to satisfy IRS wash sale requirements
  • Automatically creates a Schedule D-1 attachment and prints this IRS form for submitting along with your other Federal forms.
  • Export your Schedule D Gains & Losses report in TFX format so that you can use it for electronic filing and for importing into TurboTax™, TaxCut™ or similar programs.
  • Simply Track can import trades from a wide variety of formats including delimited text, Excel™, Money™ and Quicken™, or you may choose to cut and paste your trades from your online trade history.
  • Generates Schedule D-1 wash sale reporting even using imported data from previous and post tax years to accurately move forward wash sale adjustments.
  • Correctly computes wash sales for overlapping long term and short term trades.
  • Makes wash sale adjustments even for unequal numbers of shares bought and sold.
  • Automatically handles matching of short sales based on trade date.

 

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