Before we started preparing trader tax returns, back in 2000, we were traders, just like you. It just so happens, that we are also CPAs. We met in 1996, when we used to hang out in various trader chatrooms, and over the years, we were giving advice to so many fellow room members, that when someone suggested: "Why don't you two just start your own firm doing traders' returns?" it seemed like the obvious thing to do.
What amazed us, was the amount of misconception that traders had about taxation as it relates to traders in general. Traders who were quite willing to spend hundreds of hours researching a particular chart pattern did not give a fraction of the same amount of attention to the tax implications of their trading.
With Bob's public accounting and taxation background, and Simona's passion for the nitty gritty of numbers, we were set - our natural areas of interest and expertise divided. Bob is the tax partner, while Simona takes care of the clients' trading accounts' reconciliations.
We launched www.edaytradertax.com with our first hand knowledge of the issues traders face, and we knew that we could offer a service second to none - tax accountants who also trade. Who else could understand trader issues better?
The first and the biggest hurdle we faced was processing the traders' trades into a (to us) acceptable Schedule D1. A lot of other accountants have their clients prepare their own Schedule D1s. Others rely on out of the box 3rd party ("blackbox") software and use a Schedule generated by that software. This neatly shifts the responsibility for the content of the Schedule D1 directly to the client. In addition, the preparation of this information is very time consuming and can be frustrating for the client as well. And, what if the IRS comes back with inquiries as to the content of the Schedule D1, like we see quite frequently. Those clients are on their own, because they supplied the Form to their accountant. We knew we didn't want to take this path.
We felt it was important to offer a reconciliation service to save our clients time and headache - you give us your account log in, and we reconcile it for you, to the last transaction. We take the transactions, and we match them into closed trades (utilizing IRS required FIFO), analyze them for wash sales (if any), and prepare a complete, combined Schedule D1 for inclusion in your tax return. We handle any IRS correspondence regarding your return, including your transactions, if we prepare your Schedule D1.
We tested a number of commercially available software packages that advertise their ability to produce an accurate Schedule D1. Much to our surprise, we have not found any that would pass our testing. We entered into an alliance with a software firm to write software to our specifications. The result of our efforts, after several hundred hours of programming, is a custom software package that we can stand behind all the way.
While we might utilize other staffers' help in compiling your data, your income tax return will always be finalized by Bob Meany, CPA, licensed in the state of Illinois. We do not utilize overseas data entry services, as is becoming very common in our industry. |
