Frequently Asked Questions

The extension of pre-market trading hours – starting at 6amET – for equities refers to the expansion of the time period during which investors can trade stocks before the regular market session begins. This extension allows traders to buy and sell stocks earlier in the morning, typically before 9:30 AM Eastern Time (ET), which is when the regular trading hours commence in the U.S.

Extending pre-market trading hours can provide several benefits, including increased flexibility for investors and traders. It allows for more time to react to news and events that may impact stock prices, particularly those that occur before the market officially opens. Additionally, it can cater to international traders in different time zones who want to participate in the U.S. stock market.

While extended pre-market trading can offer opportunities, it also comes with risks. Liquidity during these hours is generally lower, which can lead to wider bid-ask spreads and increased price volatility. Additionally, news and events can have a more significant impact on stock prices when trading volumes are lower, potentially leading to abrupt price movements.

Participation in extended pre-market trading hours is available to all traders who have accounts with TradeStation.

No, not all stocks are available for trading during extended pre-market hours. Liquidity and trading activity can vary greatly among different stocks. Generally, larger and more widely traded stocks are more likely to be available for trading during extended hours, while smaller and less liquid stocks may have limited or no pre-market trading.

Yes, you can place limit orders during extended pre-market hours Time in Force(TIF) of Day+, GTC+ and GTD+. However, it’s crucial to be aware that the execution of limit orders may differ from regular trading hours, given the lower liquidity and potentially wider spreads.

Yes, there may be differences in trading rules during extended pre-market hours. For example, market and stop orders are not allowed in the pre-market session with a duration of Day+, GTC+ and GTD+.

When trading during extended pre-market hours, consider the following precautions:

• Conduct thorough research and analysis before placing trades.
• Be cautious of low liquidity and wider spreads.
• Use limit orders to control the price at which you buy or sell.
• Be prepared for increased price volatility.
• Monitor your positions closely, especially if you have open orders.
• Understand and adhere to the rules and guidelines of your brokerage or trading platform.
• Review Extended Trading Hours Risk Disclosure.

The equities trade desk will now open at 6AM ET. To receive assistance please call:
Trade Desk
To place a trade, and for balance position, and margin inquiries.
800.822.0512 U.S. (toll-free) 954.652.7900 U.S. (direct)
008.007.777.6543 Europe (toll-free) +1.954.652.7900 International (direct)

No, to participate in the new pre market hours simply place a limit order with the duration Day+, GTC+ or GTD+.

No. Clients will not see any pricing changes or increase in commission with earlier pre-market trading hours.

Yes. The rules that regulate the handling of limit orders during market hours do not apply the same way. For example, it is possible for an order to trade at a price above a resting sell limit order, and that order not be due an execution. The ‘limit order protection’ rules that are applicable during the 9:30am-4:00pm session only apply to executions that occur at the venue where the order is resting.

Non-Day Traders may execute up to three day trades in a five-trading-day period. If exceeded, the Non-Day Trader will be reclassified as a Pattern Day Trader, and all of their margin accounts will become subject to Pattern Day Trader rules. See the “Pattern Day Traders” question below for more details. The sum or total number of all margin day trades that have been executed in the previous 4 trading days can be viewed in the platform’s “Balances” section.

Additionally, each individual margin account that is held by a Non-Day Trader is limited to three opening transactions per day, less the number of day trades in that account made in the preceding four trading days. For example, if you have made two day trades in one of your margin accounts in the preceding four trading days, you will be permitted to place one new opening transaction in that account (buy or sell short) on the current day. You will still be able to place as many closing transactions (sell, buy to cover) as you would like on the current day. In some cases, this limitation may not stop the Non-Day Trader from being reclassified as a Pattern Day Trader.

You may qualify to have this opening transaction limitation removed across all your margin accounts. Please talk with the Equities Trade Desk for details.

Based on FINRA day trading rules, any client that places four day trades in a five-trading-day period is deemed to be a “pattern day trader”. Each of a Pattern Day Trader’s margin accounts must maintain a daily equity balance above U.S. $25,000 to have the ability to place opening transactions. If an account’s equity balance falls below $25,000.01, trading is restricted to closing transactions only until that account’s equity balance is increased to above $25,000.

You may elect to either:

• Contact the Equities Trade Desk and request a one-time courtesy exception with the understanding you no longer intend to day trade or trade in a way that is consistent with a pattern day trade designation. However, if you have already used a one-time exception, the pattern day trade designation will be permanent.

Or

• Request to have your margin account be reclassified as a cash account. The account must be able to withstand the 100% margin requirement of a cash account before it can be converted. This will allow you to place unlimited non-margined trades, provided your account has settled funds to place a trade. Remember that the settlement period for a stock sale is T+1 effective May 28, 2024 (one business day after trade date) and the settlement period for options sales is T+1 (one business day after trade date).

The Fully Paid Lending Program is available to all TradeStation clients who meet the following criteria:

• A minimum of $25,000 in total net worth OR one (1) years of trading experience
• An equities account (excluding custodial accounts)
• Signed disclosures and a Master Securities Lending Agreement (MLSA) separate from any previously executed margin agreement.

You can opt in to the program by clicking clicking here.

• All qualified clients who open accounts on or after 2/15/19 are automatically enrolled in the program.
• For existing clients who opened an account prior to 2/15/19, visit the Client Center to enroll in the program.
• For existing clients whose eligibility criteria has changed, please complete and submit the Client Information Update form and then visit the Client Center to enroll.

You can opt out of the program by contacting TradeStation Client Services.

1. We identify securities in your account that qualify for lending.
2. Based on market demand, some or all of your eligible securities will be lent out.
3. You’ll accrue daily income while your securities are out on loan.
4. Once securities on loan are sold or if the loan is recalled, income stops accruing to your account.
5. All securities on loan and accrued interest will be reflected in your monthly statement.

No. Your buying power will not be affected if your shares are lent out; you will maintain the same buying power as though you still had possession of those shares.

You maintain full economic ownership of the securities on loan.

No. The standard account opening requirements apply.

Yes. All equities accounts except for custodial accounts are eligible to participate in the Fully Paid Lending Program (FPLP).

Yes. Although the shares are out on loan, you can sell the full or partial position at any time.

No. Any eligible client can participate and earn additional income without paying extra fees for this service.

Securities that have been lent out, and the accrued interest, will be posted on your monthly account statement. All loans are subject to market conditions.

The incremental revenue you can earn on your positions can vary significantly from day to day, depending on the lendable value of your positions to counterparties that wish to borrow them. The rate you receive on the security from day to day can also change based on market conditions.

No. When your position is out on loan, you relinquish your voting rights for that stock. If you wish to vote, you must call Client Services and opt out of the FPLP a minimum of five (5) trading days before an upcoming proxy vote.

You lose the right to vote your shares, however, you are still eligible for all corporate actions and dividends. Dividends are paid as “in-lieu”, which are not taxed at favorable rates. At TradeStation we do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

You can update your net worth and trading experience by contacting TradeStation Client Services.

TradeStation calculates and deposits cash collateral for your securities on loan daily to a custodial bank. The collateral calculation is 102% of the market value of shares on loan. In the event of default by TradeStation, you will have the right to access the collateral as described in the Master Securities Lending Agreement (MSLA).

TradeStation offers two types of equities accounts: margin and cash.

Margin Accounts:

• Day trade qualified accounts (FINRA day trading rules, accounts above $25,000 equity)
• Non-day trade qualified accounts (accounts below $25,000 equity, trade restrictions)

Cash Accounts:

• Day trade rules do not apply to cash accounts and accounts are not restricted to three opening trades/day minus prior four business days’ day trades.
• Must wait for sale proceeds to settle before they can be reused (one business day for equities and options)
• Clients may not sell short in a cash account

Through our securities lending division, TradeStation has built numerous relationships with various broker-dealers, giving clients access to a larger-than-normal number of equities for short sale.

If an equity is not “easy to borrow,” clients may contact the Equities Trade Desk and we will attempt to locate shares for you to short. A Trade Desk representative will enter your order on the platform. You will then be able to modify/cancel the order yourself. There is no additional charge for this service. Please visit our Contact Us page for Trade Desk hours and more information.

*Short-debit fees are applicable

As a TradeStation client, you have the ability to trade securities on all listed exchanges (Nasdaq, Nasdaq BX, NYSE, NYSE AMEX, NYSE Arca, BATS, BATS Y, EDGX, and EDGA) as well as OTCBB and Pink Sheets securities.

TradeStation connects and routes to all of the major options exchanges and allows clients to place options orders up to and including four legs.

Please check one or more of the option strategies and training objectives you may wish to employ:

1. Covered Call Writing, Protective Puts – Income
2. Long Puts/Calls, Collars, Covered Puts, Long Straddles/Strangles – Income and Growth
3. Put/Call Spreads – Income and Growth
4. Uncovered Put Writing – Income, Growth, and Speculation
5. Uncovered Call Writing – Income, Growth, and Speculation

Cash accounts are eligible for covered calls, protective/covered puts, buying calls/puts, and European index spreads.

Margin accounts are eligible for all cash objectives, options spreads, short straddles/strangles, and uncovered calls/puts.

You have three buying power indicators in your margin account(s), which work as follows.

Day Trading Marginable Equities Buying Power

• This indicator will ultimately determine new order approval, and therefore will prevent new orders from exceeding this figure.
• It is capped to the “Beginning Day Trading Marginable Equities Buying Power.”
• It reflects open and filled orders.
• This indicator acts on a 1:1 ratio for fully marginable securities only; it assumes a 25% margin requirement on the purchase, hence 4:1 leverage.
• It only replenishes or increases from closing day trades.
• It will not increase from the liquidation of positions held overnight.

Overnight Marginable Equities Buying Power

• This indicator reflects open orders, filled orders and account appreciation and depreciation.
• It will not prevent you from opening new positions, and therefore is an indicator of a possible margin call if day trades are not closed out before the end of the day.
• This indicator acts on a 1:1 ratio for fully marginable securities only.

Option Buying Power

• This indicator is capped to the lesser of 50% overnight buying power and/or 25% day trading buying power.
• It will determine your options order approval, and therefore prevent options orders from exceeding this figure.
• This indicator reflects open and filled orders.

Your day trade marginal equities buying power figure is based on the premise that the stock you are purchasing is set to the 25% day trade requirement. Certain equities, for risk-related reasons, may be set at a higher margin requirement (50%, 75%, etc.). Any equity that carries a margin requirement higher than the 25% day trade rate can be found on the Special Margin Requirements page in the TradeStation Client Center. To determine the dollar amount of a security that can be purchased or sold short, you can use the following formula:

Day Trade Buying Power (DTBP) x .25/SMR%

Examples:

• You wish to purchase SKF, which carries a 60% requirement, and your current DTBP is $200,000. How much SKF can you purchase? ($200,000 x .25)/.60 = $83,333. You can purchase up to $83,333 worth of SKF.
• You wish to short SDS, which carries a 60% requirement, and your current DTBP is $350,000. How much SDS can you sell short? ($350,000 x .25)/.60 = $145,833. You can sell short up to $145,833 worth of SDS.
• You wish to short NUGT, which carries a 90% requirement, and your current DTBP is $500,000. How much NUGT can you sell short? ($500,000 x .25)/.90 = $138,888. You can sell short up to $138,888 worth of NUGT.
• You wish to short DRYS, which carries a 100% requirement, and your current DTBP is $300,000. How much DRYS can you sell short? ($300,000 x .25)/1.0 = $75,000. You can sell short up to $75,000 worth of DRYS.

Generally, options contracts that close in-the-money by $.01 or more on the last trading day before expiration will be auto-exercised. You must ensure that sufficient buying power is in the account if you plan on being exercised or assigned. Short option holders do not have any control over when assignments will occur; only the probability of such can be estimated. No options traders can know when stocks will be halted from trading or removed from Ex by Ex-automatic “in-the-money” exercise processing at the Options Clearing Corporation (see its website for memo releases).

If sufficient equity or buying power is not in the account, or if you wish to avoid taking possession of the underlying assets of an options contract that may lead to a highly margined transaction and substantial risk exposure, the options position or strategy may simply be unwound by taking market action before the expiration of trading. TradeStation reserves the right to close out any options position or deny an auto-exercise of such if an account has insufficient equity or buying power to collateralize the resulting transaction. Account owners are responsible for all options-related transactions and financial obligations in their accounts.

No. Trading short is only allowed in margin accounts; therefore, if you are eligible to complete an application online, it is imperative that you apply for margin.

Note: All applicants using a paper application, if qualified, will automatically be given margin permissions. If you decide that you do not want a margin account, please contact an account representative at 800.808.9336.

Consolidated Form 1099s will be made available online from the Client Center for TradeStation equities accounts beginning in the first half of February. These documents may include Forms 1099-B, 1099-DIV, 1099-INT, 1099-MISC and 1099-OID, depending on the activity in your account.

December 29, 2023

• SEP and SIMPLE contributions are reported on a calendar year. Contributions received by the Dec 29, 2023 due date will be reported on the tax year 2023 form 5498.

January 31, 2024

• Official due date for Equity Trust to mail out 1099R statements. Form 1099R reports distributions for traditional IRAs, Roths, SEPs, and SIMPLEs.

April 15, 2024

• Official taxpayer filing date. If taxpayers wish to file for an extension, the extension must be submitted by April 15, 2024.
• Last day to make a 2023 IRA contribution. Extensions of time to file do NOT grant additional time to make an IRA contribution. Exceptions apply for individuals living in a federally recognized disaster area.

May 31, 2024

• Equity Trust will mail out 5498 forms by May 31, 2024.

Yes. Once your Consolidated Form 1099 is posted, you can access it through the TradeStation Client Center:

• Log in to the Client Center
• Select Accounts from the main navigation menu
• Expand Equities Accounts in the left navigation menu
• Select Account Statements from the left navigation menu.

View this video to learn how to download your TradeStation trading activity for tax preparation.

Yes. TradeStation clients may save up to $15 on the purchase of TurboTax^® software. This special offer is made possible through our partnership with Intuit, Inc. Learn more.

TradeStation clients may import equities dividend, interest and buy/sell information directly into TurboTax^®. However, Section 1256 contracts, such as regulated futures contracts, foreign currency contracts or non-equity options, must be entered manually. (Scroll down for additional information regarding Section 1256 contracts.) Wash sales will be calculated after import.

• Locate your Consolidated Form 1099. If you need to download a copy online, click here.
• Open TurboTax^® and display your tax return.
• Click the File
• Select Import, then From Financial Institution.
• In the search box provided, type TradeStation to locate and select TradeStation in the lower window (it will stay highlighted), and then click the Continue button.
• Type your 8-digit TradeStation Account Number and the 11-digit alphanumeric Document ID included at the top of your Consolidated Form 1099, then click Continue.
• Check all of the checkboxes under These documents are Now Ready for Import and click Import Now.
• Click the Done button at the bottom of the Import Summary

View this video to learn how to import your TradeStation trading activity into TurboTax^®.

TradeStation clients may import equities dividend, interest and buy/sell information directly into TurboTax^®. However, Section 1256 contracts, such as regulated futures contracts, foreign currency contracts or non-equity options, must be entered manually. (Scroll down for additional information regarding Section 1256 contracts.) Wash sales will be calculated after import.

• Locate your Consolidated Form 1099. If you need to download a copy online, click here.
• Log in to your online TurboTax account and display your tax return.
• Click the Federal Taxes menu item in the left-hand sidebar, click Wages & Income, and then click I’ll choose what I work on.
• Browse to the Investment Income
• Click the Start button next to Stocks, Mutual Funds, Bonds, Other.
• If you sold any investments during the tax year, select Yes when prompted.
• In the search box labeled Import from my bank or broker, type TradeStation, then select TradeStation, and click Continue.
• Type your 8-digit TradeStation Account Number and the 11-digit alphanumeric Document ID included at the top of your Consolidated Form 1099, then click Continue.
• Check all of the checkboxes to ensure all of the data available is imported and click Import Now.
• Click the Done button at the bottom of the Import Summary screen.

View this video to learn how to import your TradeStation trading activity into TurboTax^®.

Within TurboTax^®, a position is represented by a record of the opening and closing information for that position. Typically, this comprises two trades (a buy and a sell). TurboTax^® limits the number of records that can be imported to approximately 2,500 within the installed/desktop version and approximately 500 within the online version. While importing your account information into TurboTax^®, if more than the maximum number of records are detected, you will receive notification and further instruction within the TurboTax^® interface.

If you need to edit imported data:

• Open TurboTax^® and display your tax return.
• Click Federal Taxes.
• Click Wages & Income.
• Click I’ll choose what I work on in the middle of the page.
• Scroll down to the Investment Income.
• Click Start or Update to the right of Stocks, Mutual Funds, Bonds, Other.
• Click Edit to the right of the transaction and click Continue on the next screen.
• Select Edit and make any necessary changes.
• Scroll to the bottom and click Continue.

Section 1256 contracts claim a profit/loss based on year-end value, even though the contracts haven’t been closed. Examples of Section 1256 categorized contracts include:

• Regulated futures contracts
• Foreign currency contracts
• Non-equity options
• Dealer equity options
• Dealer securities futures contracts.

If you have trading activity in your TradeStation equities account that is classified as a Section 1256 contract, it will be displayed in the Regulated Futures Contracts summary on your Consolidated Form 1099. It is important to note that if you choose to import your account data into tax preparation software, this information will not be included. To complete you tax return, you will need to enter these activities manually.

When you import your TradeStation account information into TurboTax®, your Section 1256 transactions will not be included. To report Section 1256 contracts, simply complete the following steps within TurboTax®:

• Open TurboTax® and select your tax return.
• Click the tab titled Federal Taxes, and then select Wages & Income.
• Click the button I’ll choose what to work on.
• Under the Investment Income section, locate the section titled Contracts and Straddles and click the Start button provided.
• When prompted by the question Any Straddles or Section 1256 Contracts? click Yes.
• Select any special elections that may apply to you.
• On the Contracts and Straddles page, choose the box next to the Section 1256 Contracts marked-to-market.

• Select how you would like to enter your transactions.

• If you require further assistance with reporting your Section 1256 contracts to the IRS, please contact a qualified tax adviser.

Yes. Once posted, you can download tax activity for your TradeStation equities account through the TradeStation Client Center.

• Log in to the Client Center
• Select Accounts from the main navigation menu
• Expand Equities Accounts in the left navigation menu
• Select Tax Center from the left navigation menu
• The following formats can be exported:
• QIF (GainsKeeper)
• CSV (TradeLog®, TaxAct®)
• OFX (TradeAccountant®)
• QFX (TurboTax®)

Cost basis is the original price of an asset, usually the purchase price plus commissions. In addition, adjustments for wash sales, stock splits, spinoffs and other corporate actions may be made during the time the asset is held by a customer. Upon sale of the asset, costs for commissions and fees are deducted from the proceeds. The cost basis is used to calculate capital gains and losses, depreciation and return on investment.

As mandated by the Emergency Economic Stabilization Act of 2008, TradeStation is responsible for reporting to the IRS its customers’ cost basis and short- and long-term gains or losses on the customers’ Consolidated Form 1099-B. This is intended to simplify year-end tax preparation, as Form 1099-B provides a complete, accurate accounting of the cost basis and gains/losses for the year. TradeStation is not responsible for reporting to the IRS cost basis and gain/loss information for equity positions purchased before January 1, 2011.

Form 1099-B reports a sale’s gross proceeds less commission. Brokerage firms are required to communicate cost-basis information to one another, so equity purchases made in the current tax year and transferred to TradeStation should be transferred with the cost-basis information. The 1099-B now shows the following additional information below for covered securities:

• The disallowed loss amounts due to wash sales.
• The designation of long- or short-term gain or loss.
• The cost basis for securities sold, corporate actions and adjustments for wash sales.

A tax lot is established whenever you open a new position via a purchase or short sale in a security. You can have multiple tax lots within the same security as a result of multiple purchases, or you can have a single tax lot within the same security as a result of a partially filled order.

A tax lot relief method determines the selection of which lots of a security will be liquidated first in a given transaction. In addition to selecting which lot of a security will be sold, it also identifies the associated cost basis and holding period, which are used in computing the gain or loss, and whether or not it is long term or short term. When considering specific tax strategies, you need to be aware of the potential tax consequences of your trading activity for the entire year. There may be benefits to applying a different tax lot relief method in different accounts, or in the sale of some specific covered positions.

The default lot relief method for all asset classes is first-in, first-out (FIFO). We are required by law to apply FIFO unless you specifically instruct us to use another method. The following lot relief methods are available:

• First-in, first-out (FIFO) – This method assumes that the shares sold were the first shares purchased.
• Last-in, first-out (LIFO) – This method assumes that the shares sold were the last shares purchased within the account.
• High cost – This method assumes that those shares sold first are the highest-cost shares.
• Low cost – This method assumes that those shares sold first are the lowest-cost shares. This method does not consider the length of time the shares were held.
• Hand chosen – This method assumes the account owner will identify the specific shares that are sold.
• Average – This method keeps a running tally of the average cost of security shares that are purchased or sold over time, including reinvested dividends. Typically, this method is only available for qualifying mutual funds and most ETFs. It is important to note, however, that once you sell shares of a security using the average cost method, any remaining shares are also locked into that method. However, the method can be changed for any new shares purchased after that sale.

You may configure the default lot relief method to be used for each security type (stocks, ETFs, options, and mutual funds) within each account, as well as per position, using the Gain/Loss Tax Management feature in the Client Center.

The default tax lot relief method for all asset classes is first-in, first out (FIFO). However, if you prefer to set a different tax lot relief method for a given security type (stocks, ETFs, options, or mutual funds) you can do so through the Gain/Loss Tax Management feature in the Client Center.

• Within the Gain/Loss Tax Management feature, click the Lot Relief Methods tab.
• In the box titled Lot Closing Settings, click the Change button.
• Under the section titled Default Methods, select the new default tax lot relief method desired for each asset type.
• If you prefer to use the Average method, when supported by the security, you must select the option titled Use Average instead of the defaults above under the section titled Average Eligible Securities.

The Gain/Loss Tax Management feature in the Client Center can help you track and manage your realized and unrealized gains/losses throughout the year. You can use it to generate specific reports to assist you in filing your tax return. View this video to learn how to use the tool to monitor and optimize your tax position.

Yes

Clients have until December 31, 2017, to inform TradeStation that they are electing to report their mutual funds’ cost basis using a FIFO method. We will adjust the data for trades placed in 2017, but not for those made prior to the 2017 tax year. Send your notification via email to clientservices@tradestation.com.

Or mail to:

ATTENTION: Client Services – Mutual Funds FIFO Method
TradeStation Securities
8050 SW 10th Street, Suite 2000
Plantation, FL 33324

Please provide the following information:

Name:
Joint Name (if applicable):
Address:
Telephone Number:

I/We wish to elect the first-in first-out (FIFO) method of cost accounting for the mutual fund covered shares held in the accounts listed below. List account number(s) covered by your selection:

The default tax lot relief method for all asset classes is first-in, first out (FIFO). However, if you prefer to set a different tax lot relief method for a given security type (stocks, ETFs, options, and mutual funds) you can do so through the Gain/Loss Tax Management feature in the Client Center.

• Within the Gain/Loss Tax Management feature, click the Lot Relief Methods tab.
• In the box titled Closing Transaction Log, find the position for which you want to adjust the lot relief method, and click the Edit link.
• Change the lot relief method as desired and save your changes.

You can view the tax lot information for both your open and closed positions through the Gain/Loss Tax Management feature in the Client Center. For each security a summary row is provided that, once expanded using the (+) icon, will display information about the individual underlying lots.

TradeStation is not responsible for, nor required to provide, cost basis for non-covered positions transferred into your TradeStation account. In addition, TradeStation is only required to report cost basis for covered securities purchased on or after January 1, 2011, and transferred into your account if the transferring firm provided valid cost-basis information.

You can edit the cost basis of your unsettled transferred positions or unsettled uncovered positions under the Tax Lot Transfers tab of the Gain/Loss Tax Management feature in the Client Center.

• Under the Tax Lot Transfers tab, you will be provided with the total quantity for each lot within the account selected.
• To adjust a lot, click the Edit link under the Actions column. Enter the total cost basis for the lot, including any commissions/fees paid. This will be used to calculate your total gain or loss. If you are entering the cost basis for a short position, the information will need to be entered as a negative. The transaction date should be the date the opening transaction took place.
• To enter information for another lot, click the Add Another Row link and repeat the steps above. As you add rows, the quantity of shares entered will be automatically calculated and validated against the expected total.
• Once you have assigned a cost basis for all shares and are ready to save, click the Save Changes. Click the Cancel link if you wish to undo your changes.
• You will be served a confirmation summarizing the information you entered. After verifying the information, click on Submit to save.
• You will be returned to the summary of your lots with the changes applied. The revised information will be used to calculate your future gains and losses.

Non-resident aliens with a W-8 on file and C corporations are not subject to cost-basis reporting. S corporations are subject to cost-basis reporting.

Covered securities are those for which TradeStation is responsible for reporting to the IRS gain/loss and cost-basis information. This includes all securities you purchased on or after January 1, 2011, with the exceptions of fixed-income and options securities, which were covered effective January 1, 2014.

Non-covered securities are those for which TradeStation is not responsible for reporting to the IRS. They include any positions established prior to January 1, 2011.

Your unrealized gains and losses are the difference between the current price of the positions you hold and their purchase price, reflecting how much the positions have gained or lost since you bought them. If you close one of these positions, the gain or loss will become realized, or completed.

When you sell an asset at a higher price than you paid for it, the difference between the purchase price and the sale price is your capital gain. For example, if you buy 100 shares of stock for $20 a share and sell them for $30 a share, you realize a capital gain of $10 a share times 100 shares, or $1,000. If you own the stock for more than a year before selling it, you have a long-term capital gain. If you hold the stock for less than a year, you have a short-term capital gain.

When you sell an asset for less than you paid for it, the difference between the purchase and sale prices is your capital loss. For example, if you buy 100 shares of stock at $30 a share and sell them at $20 a share, you will realize a capital loss of $10 a share times 100 shares, or $1,000.

TradeStation has opted to use the IRS default method of first-in, first-out (FIFO) and specified lot. The first method, FIFO, means that shares purchased first are sold first.

A wash sale is the result of selling a security at a loss and buying it back within 30 days of the sale date or purchasing it within 30 days prior to the sale date. The total wash sale period is 61 days: 30 days before the sale date and 30 days after.

The loss that would have been incurred for the shares sold is disallowed and added proportionately to the basis of the replacement shares. In addition, the holding period for the shares you sold is added to the holding period of the replacement shares. The disallowed loss will be obtained when the replacement shares are sold.

TradeStation reports wash sales for identical covered securities (same CUSIP) purchased and sold in the same account. In addition, wash sales do not need to be reported for securities transferred in or between accounts within TradeStation. Clients should report on substantially identical securities across accounts for covered and non-covered securities, as they always have.

As a part of the Emergency Economic Stabilization Act of 2008, TradeStation is responsible for reporting its customers’ cost basis, short- and long-term gains or losses and wash sales to the IRS via the revised Form 1099-B. Previously, we were required to report only the gross proceeds less commissions of a sale.

TradeStation is not required to report wash sales for accounts for which you made a valid “mark-to-market” election under IRS code section 475(f)(1).

Please consult with your tax advisor and/or refer to Publication 550 (Investment Income and Expenses) on how to make the mark-to-market election with the IRS. Once you receive confirmation of your election from the IRS, notify TradeStation, in writing (email is acceptable), of the identity of your TradeStation accounts as solely containing securities subject to the election. If you made such an election with the IRS and you fail to notify us, we will report your wash sales, possibly subjecting you to income tax reporting discrepancies.

Upon receipt of your election under IRS code section 475(f)(1), we will refrain from reporting wash sales in the referenced account(s) for future tax years unless and until you subsequently inform us, in writing (email is acceptable), that the election no longer applies to you or to the account(s). If so informed, we will prospectively report wash sales for your account(s).

Please download, complete and submit the Mark to Market Election – Exclude Wash Sale form to opt out of wash sale reporting, subject to qualification.

For the current tax year, TradeStation will not be reporting cost basis for IRA accounts to customers or the IRS. Cost basis may be reported to customers for informational purposes, but as this is not currently required by the IRS, cost-basis pages will only display IRA cash balances.

For mutual funds, TradeStation uses average cost as its default cost-basis accounting method. If you wish to use the average cost method, no action is required at this time. Average cost for an account is calculated by adding up the cost of all covered purchases in the account (made after January 1, 2012) and dividing that total by the number of covered shares in the account. Under the average cost method, shares are redeemed in first-in first-out order, but the cost basis for all shares will be the calculated using average cost. TradeStation also provides FIFO as a cost-basis accounting method as an option for mutual funds. For more information, please contact your tax adviser or accountant.

For ETFs, TradeStation uses FIFO as its default cost-basis accounting method.

Gain/loss statements with or without wash sale adjustments for the current year, as well as several previous years, are made available to view or download as PDF files under the Reports tab of the Gain/Loss Tax Management feature in the Client Center.

Year-to-date (YTD) 1099 reports are made available to view or download as a PDF and XLS (Microsoft Excel) file under the Reports tab of the Gain/Loss Tax Management feature in the Client Center. Two types of YTD 1099 reports are provided: a standard 1099 summary statement, and a detailed 1099 statement.