Posted by Ed Jennings on Fri, Nov 06, 2009
The tax document automation movement hinges on time savings, efficiency gains, and standardization of workflow. The way to trim the workflow ‘fat’ is with automation of document organization and data entry. The two basic categories of tax document automation are scan and organize and scan and populate software solutions. We’ve already discussed these basic functionalities in our “Tax Document Automation: What is it and Why Should I Care?” blog entry. As part of the scan and populate category, we have identified another unique solution to deal with the stock trades in your client’s brokerage documents.
Extraction of trade data is the “low hanging fruit” of the scan and populate category. In the 2008 tax season, Copanion processed more than three million tax forms. 75% of the relevant data extracted from these forms was trade data. Clearly, software that can automate data entry of trade details can replace the lion’s share of manual entry of tax data.
With scan and populate software solutions, data is automatically imported into the corresponding data field in your tax preparation software. But sometimes it’s easier to review data and tie it out before it’s entered into your tax software program. Here’s where software can provide the best of both worlds. Copanion’s GruntWorx Trades product will extract data from scanned 1099 Consolidated Brokerages Statements into a standard Excel® spreadsheet file. By extracting into a common, easy-to-use file format (every accountant knows Excel), the software allows data manipulation before it is uploaded into your tax preparation software.
GruntWorx Trades software extracts the key trade details, such as Quantity, Security Description, Purchase Date, Sale Date, Sale Amount, Purchase Amount, and Gain/Loss, and populates this information into an Excel spreadsheet, placing each brokerage account onto a separate tab. Each brokerage account can then be tied back to the 1099-B total for that account. The software also separates out stock trades that are missing a cost basis so you can quickly copy and paste the missing data fields and send them off to the client to complete.
This is an example of GruntWorx Trades output, where trade details have been extracted from Consolidated Brokerage Statements.
Once all of the trades have been reviewed and tied out, the standard Excel file makes it possible to import the trades data into your tax preparation software (providing the software supports an import functionality), saving preparers from keying in tens, hundreds, or thousands of individual trade details.
Tax preparation software packages that support import of trade details include GoSystem Tax RS, Lacerte, UltraTax, and CCH Prosystem fx Tax.