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Author: anirudhmodi Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121564  
Subject: Re: What do I have? Wash or loss? Date: 7/23/2000 5:54 PM
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Open a FREE trial a/c at http://www.GainsKeeper.com and enter all the transactions you mentioned above. It will automatically prepare your Schedule D in real-time, clarifying all your doubts. I just evaluated the website and here is what I have to say about it
(as well as for http://www.SellSignal.com):

GainsKeeper.com
===============
It was fairly easy to open a new a/c and get started. The site doesn't look as attractive as SellSignal.com, but is well organized. It offers a FREE 30-day trial (no need for credit card info for this), and charges
$35/year (for upto 99 trades/year) beyond that period. The charges are $99/year for 100-499 trades/year and $199/year for 500+ trades/year.

To begin with, I keyed in my portfolio (consisting of about 35 transactions) sorted by the different brokerage accounts I had. Everything was quite intuitive and easy. I could either set up my own
brokerage account or select from a list of available popular brokers. It also had no problems with fractional shares (which I have in my BuyAndHold.com a/c) unlike SellSignal.com which would only accept whole shares. I could either enter the total cost of the transaction or the number of shares bought/sold along with the commission. Once everything was keyed in, I was all set to generate my tax reports. I was impressed with the reports! GainsKeeper keeps track of all the corporate actions (splits, dividends, etc) and includes them in your report, hence it saved me the hassle of converting some of my old holdings (like CSCO) on a split-adjusted basis. It automatically recognized wash sales (I had a few, which had been a big headache for me) and adjusted the capital gains accordingly. It also did tax-lot accounting, marking and tracking each lot of the same stock separately, as required by the IRS. I could generate an aggregated report for all my trading accounts (optionally in Adobe PDF format which is ideal for printing) for my realized capital gains/loss for the calendar year with one click, which I could simply attach with my Schedule D at the time of filing the taxes!

All in all, this seemed like a very useful service, especially for people who trade often and want to avoid the hassle of filling their Schedule D at tax-time. This is a *major* time-saver!! This is also an ideal service for novices who do not know much about tax rules governing wash-sales and lot accounting. Another use for GainsKeeper is to evaluate the implications of any buy/sell transaction on your taxes before actually carrying them out (although this feature is not offered explicitly; but one can always enter the buy/sell as a dummy transactions to see their effect on the taxes, and then easily delete them later with a single click). The site also has an "Education" section where it answers some basic questions on investment-related taxes, a very useful addition indeed. Among the cons, GainsKeeper does not handle short sales and options (luckily, I don't have any yet!), which might turn off the active trader from utilizing their services.

SellSignal.com
===============
Opening a new a/c and getting started was straightforward. The site seems very attractive and well organized. The service is totally FREE. However, the site was inaccessible several times for random
intervals during the testing process, thus making the experience very irritating!

Keying the portfolio was easy. However, I could not add a broker of my choice, and had to choose from the ones supplied (there was an "other" option though). The application would not accept fractional shares, hence I had to round up my holdings in BuyAndHold.com which lead to inaccuracies in the portfolio. I also had to calculate the post-split values for some of my holdings (CSCO for instance) before keying in, as the program would not keep track of such Corporate Actions (CA). The program did detect wash sales automatically, but messed up all the calculations as it follows a HIFO (Highest Cost In First Out) lot management technique as opposed to the conventional FIFO (First In First Out) technique. In doing so, it was prone to selling the shares bought via broker A using broker B and mess up all the calculations! Moreover, there was a major bug in the accounting scheme, which would calculate the total cost of the holdings incorrectly (off by a mile!) after a wash sale was detected. This would mess up the entire portfolio!! As a consequence, the Schedule D was also incorrectly calculated. On the up side, there was some good tax-related information available for browsing in the "Education" section, although not a whole lot. There was also a "SellSignal" indicator associated with every stock, which as the name suggests, advises the user whether to buy, sell or hold the equity at any given time based on certain parameters which the user can set for the portfolio. There are also some useful portfolio alerts that get triggered based on certain preset criteria, and the program also provides some basic alerts to realize gains or losses based on the current Schedule D status, so as to minimize the Capital Gains taxes to be paid (a very neat feature indeed!).

Conclusion: While the service is FREE, promises a lot, and is quite good, it is not 100% accurate and thus useless for tax-filing purposes. It is designed mainly for the long-term investor and does not handle
short sales and options.

-anirudh
http://www.anirudh.net
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