Reconciling

Overview

Version 3.2 introduced a Reconciliation Wizard.  If you have that version then click on the button in the banner and follow the instructions.  There are many new features to assist with the reconciliation process.  For historical continuity you can still uses these instructions.

At anytime you can add, delete or edit a transactions.  For example if you double click on a transactions the Add/Modify transaction dialog opens and allows you to make corrections.

TA automatically matches transactions.  If you see no transactions in the Schedule D report then there is likely a problem with the data.  For example a (-ve) "-" sign was imported as part of the quantity.

Step I: 1099 Total

Screen: Transactions
Display Mode: All Symbols
Display View: Sales - All (1099 total)
Date Range Type: Year & Tax Period
Year: Current Tax Year
Period: All

The "Amount" should match your 1099.  Check for the following. 

A) Determine if you have imported all of the transactions.  Change Display View to "All Transactions" and note the number of lines that appear.  Compare this to the number of lines in the file that you have imported.
B) We have tested the calculations in TA against spreadsheets and consistently calculate a correct total.  Review the 1099 and determine if there are items missing in either the data or the 1099 document.

Step II: Schedule D Sales Total = 1099 Sales

If all of your trades are grouped and none are Short Sales then the Sales total for the Schedule D will match the result in Step I.  If they do not match then additional work is needed to find and fix the data errors.

Step III: Correct Data Errors - Sequence Errors Discovery

Some brokers allow a position to go from + to - in one trade.  This causes confusion when matching trades.  For example if your position is 300 and there is a Sale of 500, this will cause a Sequence Error.  Use Tools/Sequence Error Discovery.  This utility will find and correct these errors.  To correct this example the transactions of Sale 500 is changed into 1) Sale 300 and 2) Short Sale 200.  Please read the dialog notes for more information.  After running the tool, continue to the next step.

Step IV: Correct Data Errors - Long/Short Discovery

TA matches Buys with Sales and Short Sales with Buys to Cover to create Groups.  Some brokers deliver Short Sales as Sales.  This will never group with a Buy because the Sale is before the Buy.  Use Tools/Long/Short Discovery to fix these errors.  The dialog allows you to change all of the errors found.

If you have not reconciled your account then TA will display a warning.  You can ignore the warning but you may discover later that a trade is missing and will need to repeat the Long/Short Discovery step.  Please read the dialog notes for more information.  After running tool, continue to the next step.

Step V: Find Missing Transactions - Using the Baseline Reconciliation Tool.

Select Tools/Baseline/Missing Position Discovery to perform calculations and determine what is missing.  This dialog does not change transactions, it is a calculator.  Within the TradeAccountant's Baseline/Missing Position Discovery view, compare the TA Calculated position for each security with your current statement or with your latest downloaded positions statement from your broker. The "Current" and the "Long/Short" items can be edited or downloaded to match the current positions.

Review the Action Required column to determine the quantity missing.  Then go to the Transaction Screen and add the missing transactions.  (Note: this dialog has been simplified with the introduction of version 3.2)

Step VI: Not Grouped Sales

Screen: Groups
Display Mode: All Symbols
Display View: Not Grouped - Sales & Short Sales
Date Range Type: Year & Tax Period
Year: All
Period: All

If you see Ungrouped Sales then additional work is needed.  Here are some basic rules:

Rule 1: For every Sale there must be a corresponding Buy with a date before the Sale.
Rule 2: For every Short Sale there must be a corresponding Buy to Cover with a date after the Short Sale.
Rule 3: For every Option Buy to Open there is either a Sale to Close or there is an Exercise or Expire.
Rule 4: For every Option Sale to Open there is either a Buy to Close or there is an Assign or Expire.

Brokers typically don't include a transaction for Exercise, Assign or Expire that imports.  You can add the Sale to Close or Buy to Close without additional setup work.  However before you can Exercise, Assign or Expire you must use Edit/Symbol - Add/Modify and add the Underlying Symbol for each Option and enter the Expiration Date and Strike Price.  To do this select the edit mode while in the dialog.

In the example below there are no Ungrouped Sales.  It is ok to have Ungrouped Buys.

 

Step VII: Find Missing Transactions - Using the Positions View

While looking at the Not Grouped Sales view select a security symbol and write down the symbol and date.  Then change to the following view and locate the symbol.

Screen: Transactions
Display Mode: By Symbols
Display View: Positions & Corp. Events (by date)
Date Range Type: Year & Tax Period
Year: All
Period: All

This view provides the history of the position.  There are three ways to start an account.  1) If the account history started with a Buy then the initial position is positive.  If it started with a Sale then the initial position is negative.  However the Sale should be a Short Sale. If the account history started with a Journal In then the position is positive.

Use this view and the insight from the reconciliation process to determine what action to take.  For example if you are missing a Buy then add it.  If the position shows a Sale that should be a Short Sale then run Long/Short Discovery.  Also remember to check for a corporate events.  If it is missing then add it using Edit/Symbols (Corporate Events).

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