EquityStat and Taxes

It’s that dreaded time of year – tax time. EquityStat’s portfolio manager has several tools to help investors with their taxes.

If you sold any shares last year, you can use EquityStat to generate IRS Form 8949.  IRS Form 8949 is a form that shows your short-term  and long-term capital gains on any investment sale.  EquityStat will automatically calculate these capital gains.  It will then generate a PDF of Form 8949 with all needed information that the IRS requires.  You can then give this form to your tax preparer when you are preparing your taxes.  To generate IRS Form 8949, click the Tools menu and then choose the Generate Form 8949 menuitem.

IRS Form 8949

Another tool to help you with your taxes is the ability to export your investment’s transactions to a spreadsheet. To export your transactions, click the Tools menu and then choose the Export Transactions menuitem. When you export your transactions, you will get a spreadsheet showing each transaction for the investment including the type of transaction it is (e.g. Buy, Sell, Dividend, etc). With this information, your tax preparer can calculate your taxable capital-gains and taxable dividends for all of your investments.

How did your investments perform in 2016?

How did your investments do in 2016?  What was your best stock?  What was your worst?

If you are not tracking your investment’s performance, consider using EquityStat.  With EquityStat you can track the overall performance of your portfolio as well as the performance of each individual investment.  EquityStat tracks the annualized return, daily gain, overall gain and many other metrics of your investments.  With these metrics you can easily determine what are your best investments and what are your worst investments.

EquityStat Portfolio Analysis
EquityStat Portfolio Analysis

In addition EquityStat provides an analysis of your account and portfolios.  With our account/portfolio analysis you can get a graphical and tableuare view of the performance of your investments.  For example, you can see the performance of your account/portfolio overtime.  Using the account/portfolio analysis you can also see which investments were your best performing investments and which investments were your least performing investments.


Cost Basis

What is Cost Basis?

Investopedia defines cost basis as:

The original value of an asset for tax purposes (usually the purchase price), adjusted for stock splits, dividends and return of capital distributions. This value is used to determine the capital gain, which is equal to the difference between the asset’s cost basis and the current market value. Also known as “tax basis”.

Why is it important?

The IRS is requiring more and more reporting of your cost basis of your investment.  They also require your report the capital gains/losses of your investments. To calculate your capital gains you need to know your cost basis.

How do you calculate it?

On the surface calculating cost basis sounds easy. Just use the price you paid for your stock. For example, if you purchased a 100 shares of XYZ company for $120 then your cost basis is $120. However, things get complicated if you had 3 for 2 stock split. Also, what if you purchase an additional 50 shares for $90? What if you have a split, reinvest capital gains and purchases in a given year? What is your cost basis? Now things get really complicated.

How EquityStat makes things easier

With EquityStat all you have to do is enter your purchases, splits, capital gains and we will calculate your cost basis. Then when you sell your stock whether all of your shares or just some of your shares, we can easily calculate your gain or loss. You can then generate IRS Form 8949 that will show your cost for each investment you sold in the last year.

Investments, Taxes, Form 8949, Schedule D

Selling Investments and the IRS

The IRS is requiring more reporting when you sell your investments.  Specifically, they require you to report the investment cost, cost basis in investment terminology, and the gain/loss from the investment sale.  If you purchase 100 shares of a stock and sell 100 shares of the stock, your cost basis is easy to calculate.  Things get more difficult when you purchase shares in different lots.  For example, you purchase 100 shares in 2011, 50 shares in 2012, 200 shares in 2013 and sell 160 shares in 2014.

Form 8949

What is your cost basis in the above scenario?  This is not an easy calculation to do.  To make things even more difficult, you have to report both your short term gains and long term gains to the IRS separately.  Fortunately, EquityStat makes this easy.  EquityStat calculates your cost basis for each investment and can also generate IRS Form 8949 which is a report that shows your gain/loss on each investment sold.  Your tax preparer can then use Form 8949 to create the IRS Schedule D form.

To Generate Form 8949, click the Tools menu at the top of the portfolio and then click the Generate IRS Form 8949. Choose your tax year and EquityStat will generate the report showing both your short term and long term gain/loss on each investment you sold during the tax year.