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

 

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

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

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

 

 

 

IRS Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.

Understanding the 2009 Gain/Loss Summary Worksheet

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

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


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

 

 

IRS Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.

Cost Basis & Asset Transfers

Overview: 

This article provides Interactive Brokers customers with information on how to update cost basis information with recently transferred in positions.  

Cost basis, the original price paid for your positions, may arrive with the transfer of assets into your Interactive Brokers account.  If the cost basis is missing, then your broker may update the cost basis.  Industry regulations and policies specific to your tax jurisdiction will determine the available options.

Ultimately, you are responsible for retaining the transaction records for your purchases and sales.

 

Non-US Persons & Entities

The Position Transfer Cost Basis page lets you specify the cost basis for positions transferred into your account.  If there are no eligible transactions displayed,  then use the Client Services Message Center to send the information to Client Services. 

Send the following position details:

  • Quantity: The number of shares or contracts for the position.
  • Purchase Date: The acquisition date for the position.
  • Total Cost: The total cost basis for the entire position.
  • Currency: The currency for the position.

If you require assistance, please contact us.

 

US Persons & Entities

The Emergency Economic Stabilization Act of 2008 requires US firms to include cost basis and the holding period of closed positions on tax forms and with asset transfers.  For positions acquired on or before December 31, 2010, the Position Transfer Cost Basis page lets you specify the cost basis for positions designated as "non-covered" by the previous holding broker.

Refer to the information below when cost basis is missing from incoming asset transfers with positions purchased on or after January 1, 2011 or designated by your previous broker as a "covered security": 

Assets Received From Another Firm

Assets Transferred Between IB Accounts

Assets Delivered Out To Another Firm

 

Covered/Non-Covered Securities

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

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

 

Assets Received From Another Firm

By law, US financial institutions that receive customer assets from another firm must receive cost basis information directly from that delivering broker.  Generally, the cost basis is transmitted within 15 days of the asset delivery.  

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

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

  • When can I expect my Cost Basis to update after the transfer of a “Non-Covered Security”?
Your account may not reflect an updated cost basis. The Activity Statements will display a unit price as of the closing price on the asset transfer date.  
 
When the delivering firm fails to send cost basis data, then the transferred assets are considered "Non-Covered" for the purposes of the Emergency Economic Stabilization Act of 2008.  IB will flag the assets as "Non-Covered" and will not include the cost basis data on any US tax forms.
  • What are your options when the other firm does not send any cost basis data to IB?
For a “Covered Security,” clients should contact the delivering firm and request transmission of the cost basis directly to IB LLC. The other firm must send the information directly to IB.
 
For a “Non-Covered Security,” clients should retain the original cost basis for their records and consult their tax advisor. IB will flag the asset as non-covered and will NOT report cost basis information to the IRS.  Clients will report the non-covered security with the applicable cost basis separately to the IRS.
  • Can clients send cost basis information to IB for their transferred securities?

No.  US regulations prohibit IB from form accepting customer-furnished cost basis data on covered securities for US persons and entities. 

 
 

Assets Transferred Between IB Accounts

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

Assets Delivered Out To Another Firm

Along with any outgoing asset transfer, IB delivers cost basis electronically to other firms via the Cost Basis Reporting Service (CBRS).  IB does not send paper Cost Basis Transfer Statements.

 

 

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

 
IRS Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.

 

Why are corrected 1099-DIV forms issued ?

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

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

 

Disclaimer:  IB does not provide tax advice. These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any international, federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. We recommend that you consult a qualified tax advisor or refer to the U.S. Internal Revenue Service.

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

Overview: 

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

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

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

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

Disclaimer:  IB does not provide tax advice. These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any international, federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. We recommend that you consult a qualified tax advisor or refer to the U.S. Internal Revenue Service.

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

Background: 

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

Tax Treaty Benefits

Overview: 

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

Background: 

Tax Treaties*

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

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

*Country list as of April 2009

 

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

 

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

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

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

Which Tax Form Should I Select?

Overview: 

3 simple questions can help you choose a tax certification form.   Read the questions and select the form.  For more detailed help, see Tax Information & Reporting.

Question # 1:      Are you a U.S. Person or a U.S. Entity?

• U.S. Citizen • U.S. Business or Organization
• U.S. Green Card Holder • U.S. Domestic Trust
                                       • U.S. Legal Resident

If the answer is YES, complete Form W-9

If the answer is NO, go to # 2.

Question # 2:      Do you have a U.S. Visa?

 

• H-1B Visa Holder • TN Visa Holder         
                                         • O-1 Visa Holder

If the answer is YES, find your status by the "substantial presence test." See More U.S. Legal Resident Info 

If the answer is NO, go to # 3.

Question # 3:      Are you a Legal Resident or Entity of another country?

                                      *Question does Not apply to U.S. Citizens/Entities or Green Card Holders

• Permanent Home Outside of U.S • Entity Formed Outside of U.S.
                                      •Business or Organization formed outside of U.S.

If the answer is YES, complete Form W-8  (U.S. Citizens, Green Card Holders, and Entities still complete the W-9.)

NOT SURE because you work, live, or study in the U.S. then, see More U.S. Legal Resident Info 

 

Disclaimer:  IB does not provide tax advice. These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any international, federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. We recommend that you consult a qualified tax adviser or refer to the U.S. Internal Revenue Service.

Certify Your Tax Status

Overview: 

Filling out a tax certification form is required to open an IB account.  The forms confirm your tax status in relation to the United States.  Information provided by you may lower or exempt the U.S. tax withholding on your account.

Background: 

This article will help you to:

►Choose the correct certification form                            ►Find your tax treaty benefits

►Fill out and submit your form online                              ►Answer tax certification questions

 

 

 

 

Which Form Do You Pick?

Tax Treaty Benefits

Management of account activity differs for each account type.  IB is a U.S. broker and must follow U.S. guidelines.  3 simple questions help you choose the right form

Some countries have a tax treaty with the U.S.  Find out if you benefit from a lower tax-withholding rate. Tax Treaty Benefit Info

Filling Out The Form

Tax Certification – FAQ’s

The certification form is direct.  Supply basic account information on the true owner of the assets or entity.  Select  W-9 Instructions or W-8 Instructions for help. Seek professional advice for tax questions.  These common questions and answers may help you make an informed decision.  Tax Certification - Frequently Asked Questions

 

 

 

Disclaimer:  IB does not provide tax advice. These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any international, federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. We recommend that you consult a qualified tax advisor or refer to the U.S. Internal Revenue Service.

 

 

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