Your brokerage firm must send you regular account statements that document your investment activity, including a year-end statement. The year-end brokerage account statement does more than simply provide account details. Either alone or in combination with your interim account statements, it is a useful tool that can make preparing your income tax return a lot easier and reduce the chance of making errors.
A year-end brokerage account statement begins with your account information and a summary of your account status. The current balance in your account is listed. The ending balance from the previous year is included for purposes of comparison. Statements vary in format, depending on the brokerage firm. However, all provide this basic information. Some include extra features such as a description of your asset allocation in the form of a graph or chart that states the proportion of your portfolio that is invested in stocks, bonds and other securities.
One section of your brokerage account statement provides a detailed description of the securities you currently hold. It will list the stocks, number of and other securities such as bonds and mutual funds. The purchase price and date of purchase of each item and the fees charged are included. Some brokerage firms also include the current market value of the securities as of the date of the statement.
Each brokerage account statement includes a description of each transaction you have made in the previous month or quarter. A year-end statement may list all transactions for the year. If that isn’t the case for you, refer back to interim account statements if necessary. For tax purposes, sales transactions are especially useful. These transaction reports include the purchase price, sale price and fees charged. With this information, you can calculate your capital gain or loss, although many account statements list this information for you. The transactions section also lists dividends you have received and capital gains distributions from mutual funds. These amounts are also taxable income for the year covered by the statement.
A year-end brokerage account statement has several uses. It allows you to track your investment activity and to check for errors. Features such as asset allocation charts help you to determine how well your actual investments and results match your investment strategy and to decide if you need to make changes. Finally, with statements that provide complete breakdowns of the results of each investment, reporting your investment income on Schedule D of your income tax return is greatly simplified.
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