1099’s reflect the performance of a trading account on an annual calendar basis. When you review your performance, gains are treated as a positive number. Conversely, losses are treated as bracketed numbers.
Most filers will use IRS Form 6781 and Schedule D to report their Capital Gains or Losses.
If you are a speculator, boxes A, B, and C should not apply. Only hedgers that use the cash markets have this choice. Box D may be used if you elect to carry back a loss. ADMIS does not give tax advice. We recommend that you consult a tax professional.
No. Individual Transactions need not be reported. This data is reported on Line 8 Total Realized Profit (Loss) in 2019.
All realized foreign currency transactions are reflected on your 1099 on a monthly basis. Your realized profit or loss is then converted to U.S. dollars using that months average rate. Your 1099 will note the conversion rate.
Line 11 is the total profit (or loss) and it reflects realized gain (or loss) and the change in Open Trade Equity during the year.
Open Trade Equity is a factor in determining your gain or loss for the year. Your Open Trade Equity at year end is reported on Line 10 of your 1099B – unrealized profit/loss. If you had Open Trade Equity at the end of the prior year, it is reported on Line 9 and reversed on the years 1099B, as that equity would now be included in Line 9, realized profit/loss.
Add the totals of Line 8, the reverse of Line 9, and Line 10 together. You must reverse Line 9, the previous year’s Open Trade Equity as this number was reflected in your prior year 1099.
Commissions and any type of fees are included in the realized profit or loss aggregates total in Line 8.
On the back of your 1099-B under instructions for Recipient are definitions for each line item for tax purposes. If your futures trading was not relevant to the line item then you would receive no tax information for that particular line. The vast majority of ADMIS customers will be limited to Lines 8, 9, 10 and 11.
Gross proceeds represent the value of a sale of a security such as a Treasury Bill. In addition, gross proceeds will be noted if you retendered a deliverable warehouse receipt on a short futures contract. There will be a section at the bottom of 1099-B that will provide you with this information. The majority of customers will use Schedule D to determine the Capital Gain or Loss of these transactions. The IRS has directed firms to report the sales side of Gross Purchases. Your cost basis for a security or delivery is simply the purchase price. The most efficient way to determine your purchase price is to review your monthly statements. The net profit or loss is the difference between the purchase and sale price of the security.
If a Treasury matures in your account, nothing is reflected in Gross proceeds. Interest income is reflected on the 1099-INT.
On the Interest income is primarily derived from the purchase and maturation of U.S. Treasury Bills. You will receive a 1099-INT that will indicate the amount of interest earned for the calendar year. Most taxpayers will use Schedule B to report Interest income.
To determine interest income after selling a treasury prior to maturity, one is required to compute the difference in the purchase price with the applicable Gross proceeds amount.
This is a personal decision. ADMIS does not give tax advice and recommends that if you do prepare your own return, you should have a thorough understanding of the tax ramifications of futures trading and Form 6781.
If your account transferred firms during the tax year, you will receive two 1099’s, one from ADMIS and one from your other firm. You must combine the amounts on those 1099’s to properly reflect your trading activity for tax purposes.
TAX ADVICE DISCLAIMER: Information provided here is presented in good faith and believed to be accurate. Such information is general in nature and is not intended to be tax advice; any reliance on the information is solely at your own risk. Before making tax or business decisions, please contact a professional tax advisor, accountant or attorney who is familiar with all the relevant facts.
Copyright © ADM Investor Services, Inc. All rights reserved. Revised: January 31, 2020.