Welcome to the Tuesday Evening Investools user group meeting Brian Cox brian@coxintl.com The meeting will start at 8PM This week we will be discussing tax preparation with Steve Schroder Please complete sign-in sheet at: http://bit.ly/tues_conf Please complete the survey form at: http://bit.ly/tues_suggestions

Taxation of Capital Gains/Losses By Steve Schroder 2/16/10

Taxation of Capital Gains/Losses Stock and Options Trades are considered capital gains and losses from a US and State Income Tax perspective The focus of this discussion is the effect of stock and option trades only on capital gains taxation

Taxation of Capital Gains/Losses Stock and Options Trades are classified as either long term capital gains or short term capital gains based upon the holding period of the trade. In general stock or option positions held greater than one year are classified as long term capital gains/losses. Those held less than one year are considered short term capital gains/losses The basis(cost) in a position is your investment plus commissions. The sales price is sales price less any commissions paid

Taxation of Capital Gains/Losses When completing the Schedule D form, you must compare the sales proceeds from your broker submitted form 1099. The total proceeds from stock and option trades must equal to the total of line 3 and line 10 from schedule D.

Taxation of Capital Gains/Losses Additional support can be gained from broker provided software(gainskeeper). Run the software in detail for all sales transactions in 2009. The software should also capture the purchase information on stocks or options.

Taxation of Capital Gains/Losses For complex option trades, the taxpayer will have to break down the components of the option trades to the individual options. I suggest tracking these components in a separate excel spreadsheet. You brokerage firm(TOS) will likely track the sale and acquisition sides of the transactions for you. In addition, I suggest asking TOS for both the breakdown of acquisition and sale at the individual option level.

Taxation of Capital Gains/Losses Final suggestion is to keep good records, and if preparing your own taxes, I suggest using an IRS qualified tax software such as Turbotax(San Diego Company).

Taxation of Capital Gains/Losses

Taxation of Capital Gains/Losses

Taxation of Capital Gains/Losses