No Purchase Data Downloaded, Now What ?
When downloading directly from the broker to tax preparation software, frequently only the sales data is provided,
leaving manual entry of purchase information for the taxpayer.
The universal TXF format should be used to guarantee successful import of trade data. Most brokers provide the capability
for downloading transactions of stocks and options into XLS or CSV spreadsheet format.
Schedule D Tax Tool can then generate the TXF file used for import into tax preparation software.
You may wonder why many brokers only provide sales information for direct download to tax preparation software, but all trade data
to local spreadsheet files. One reason may be that the broker typically does not provide matched up trades, only the raw data.
The 1099-B which the broker sends to the IRS does not include matched trades, only the sales data.
Likewise, tax preparation software does not match up trades either. Therefore, the tax preparation software would not even know
what to do with the purchase data.
Beginning in tax year 2011, brokers are required to provide purchase data for certain covered securities, mostly stocks at this point.
In subsequent years, the types of covered securities will expand to include options and other capital assets.