Investing

Interactive Brokers - Activity Report errors

  • Last Updated:
  • Oct 12th, 2018 6:20 am
[OP]
Deal Addict
Jan 5, 2006
1009 posts
163 upvotes
Mississauga

Interactive Brokers - Activity Report errors

Hi RFD,

I'm noticing inconsistencies with my IB activity reports in terms of Realized profits, and I foresee a lot of headache at tax time. What kind of reports do you all use for your tax reporting?

My specific issue is that IB doesn't to seem to apply weighting for calculating adjusted cost basis:

Purchase 25 shares of XYZ @ $7.74
Purchase 75 Shares of XYZ @ $6.25
Sell 50 shares of XYZ @ $6.78.

I calculate my ACB to be $6.64, yet IB uses $6.99 for profit and loss reporting, which is exactly ($7.74 + $6.25)/2

Any helpful comments would be appreciated. Thanks in advance.
The early bird gets the worm, but the second mouse gets the cheese.
audentis Fortuna iuvat
27 replies
Sr. Member
Apr 9, 2012
581 posts
167 upvotes
Markham
Interesting.... I never looked at that. I would be interested in the outcome as well.
Deal Fanatic
Jun 27, 2007
5502 posts
1952 upvotes
MrMom wrote: FIFO (25X7.74 + 25X6.25)/50 =$6.995
there are 75 shares at 6.25 and 25 shares at 7.74
I get 6.62
(25 x 7.74 + 75 x 6.25) / 100
It's easy to grin when your ship comes in and you've got the stock market beat.
But the man worthwhile is the man who can smile when his shorts are too tight in the seat 😃
In Fed We Trust - Make ES Limit Down Great Again!
[OP]
Deal Addict
Jan 5, 2006
1009 posts
163 upvotes
Mississauga
MrMom wrote: FIFO (25X7.74 + 25X6.25)/50 =$6.995

Assumed zero transaction costs.

Maybe this site can help you, https://www.adjustedcostbase.ca/blog/ho ... tal-gains/
Thanks MrMom, I had no idea they were using FIFO. I was under the impression that they couldn't do that for Canadians given the CRA rules. I guess I'll have to run my own reports to calculate ACB if there are no settings for that in IB.
The early bird gets the worm, but the second mouse gets the cheese.
audentis Fortuna iuvat
Deal Fanatic
Aug 17, 2008
5615 posts
5017 upvotes
SamInfinity wrote: Thanks MrMom, I had no idea they were using FIFO. I was under the impression that they couldn't do that for Canadians given the CRA rules. I guess I'll have to run my own reports to calculate ACB if there are no settings for that in IB.
Give IB a call or hit them up on a chat to verify their methodology is your best course of action.

CRA example agrees with your calc. https://www.canada.ca/en/revenue-agency ... perty.html
Sr. Member
User avatar
Apr 22, 2014
523 posts
257 upvotes
Edmonton, AB
IB will provide you with a T5008 that includes ACB. But I've always said, it's anyone's guess whether their ACB is correct and you should track it yourself.
[OP]
Deal Addict
Jan 5, 2006
1009 posts
163 upvotes
Mississauga
philland wrote: IB will provide you with a T5008 that includes ACB. But I've always said, it's anyone's guess whether their ACB is correct and you should track it yourself.
Thanks Philland and all posters. I will await my T-5008 and compare it to my own spreadsheet. Will Update towards April
The early bird gets the worm, but the second mouse gets the cheese.
audentis Fortuna iuvat
Sr. Member
Apr 9, 2012
581 posts
167 upvotes
Markham
I never really track my own and used what IB provided.

If the CRA audits, isn't providing the T-5008 and activity report from IB sufficient? Would CRA not take that as back up documents?
Deal Addict
User avatar
Apr 23, 2009
1733 posts
713 upvotes
Why would anyone use their broker's reports for ACB? In US, FIFO is an acceptable method for ACB calculations but not here in Canada. I use activity reports only for interest expenses, trade confirmations and dividends. I calculate my own ACB (across different accounts), capital gains and losses.
Deal Addict
User avatar
Apr 23, 2009
1733 posts
713 upvotes
How would CRA know your ACB? You have to provide sufficient support for your ACB calculation in whatever form, shape and manner necessary.
atang810 wrote: I never really track my own and used what IB provided.

If the CRA audits, isn't providing the T-5008 and activity report from IB sufficient? Would CRA not take that as back up documents?
Sr. Member
Apr 9, 2012
581 posts
167 upvotes
Markham
ruchir wrote: How would CRA know your ACB? You have to provide sufficient support for your ACB calculation in whatever form, shape and manner necessary.
Interactive Brokers provides this. They have an average cost for you. Why wouldn't you use your brokers report?
Deal Addict
User avatar
Apr 23, 2009
1733 posts
713 upvotes
Because I have brokerage accounts with IB, VB, QT and TD so my ACB is a combination of positions held in these accounts. I do use IB reports but only for proceeds / costs. Also, some these positions are held in joint accounts for income splitting so I have to properly allocate proceeds / costs to have an accurate ABC amount. Unless you are always going to have only one broker i.e. never transferring accounts from one broker to another, you will invariably mess up your ACB.

For example, when transferring accounts some broker will use the market price on the day of transfer as your ACB by default. I cannot see how your broker's ACB always be accurate.

atang810 wrote: Interactive Brokers provides this. They have an average cost for you. Why wouldn't you use your brokers report?
Last edited by ruchir on Feb 7th, 2018 2:52 pm, edited 1 time in total.
Sr. Member
Apr 9, 2012
581 posts
167 upvotes
Markham
ruchir wrote: Because I have brokerage accounts with IB, VB, QT and TD so my ACB is a combination of positions held in these accounts. I do use IB reports but only for proceeds / costs.
?? is there a reason why you are using all these different brokers to trade effectively the same stocks?

Well, I only use IB, so I think it's pretty efficient if I can just provide the activity report which includes the ACB & realized gains.
Deal Addict
User avatar
Apr 23, 2009
1733 posts
713 upvotes
just edited my above post......that answers your question.

I usually buy and hold for long term so over the years I have accumulated positions in different accounts as dividends became available. Often end up buying the same stocks in different accounts if the stock is on sale.....

For example, these days I am buying ENB, CNR, and BAM from the dividends I receive. I don't do automatic DRIP.

atang810 wrote: ?? is there a reason why you are using all these different brokers to trade effectively the same stocks?

Well, I only use IB, so I think it's pretty efficient if I can just provide the activity report which includes the ACB & realized gains.
Deal Addict
Oct 6, 2015
2463 posts
1372 upvotes
IB actually tracks what you paid for an individual share, and accordingly, does *not* average the prices when it calculates the gain on the sale of a share. It uses the actual difference between the buying price of the shares, and the selling price.

If you have IB generate an expanded report, you can actually see the purchase price of every share and even forex instrument in your portfolio.
Deal Fanatic
Feb 4, 2015
6779 posts
3075 upvotes
Canada, Eh!!
Believe in Canada, unlike US, you need to use average cost.

Don't most of these activity/trading statements say it is not for tax purposes or similar disclaimer?

Perhaps IB, being US company, is using the convention there [fifo, or choose lots that was available until recent tax reform]
.......
July 13, 2017 to October 25, 2018: BOC raised rates 5 times and MCAP raised its prime rate next day each time.

2020: BOC dropped rates 3 times and MCAP waited and waited to drop its prime rate to include all 3 drops.
Newbie
Mar 19, 2018
3 posts
I called Interactive Brokers about this ACB (Adjusted Cost Base) or IFIO (First- In First- Out) issue for my activity statement and T5008. At first they said Canadian account should use FIFO. After I told them CRA request ACB, then they said you could ask your accountant to make calculation with ACB but they only provide FIFO calculation to Canadian account. I heard IB provides options of ACB or FIFO to US customers. I just don’t understand why they only provide a wrong way tax statement to Canadian customers but actually they have the ability to do either method.
For my situation this year there could be a few tens of thousand dollars difference and I have to pay much more tax at front. Also on their trading platform Trader Workstation, average price is used for trading. ACB seems more reasonable and easy to use.
What I can do? Any suggestion?
Deal Addict
User avatar
Apr 23, 2009
1733 posts
713 upvotes
Yanghuan wrote: I called Interactive Brokers about this ACB (Adjusted Cost Base) or IFIO (First- In First- Out) issue for my activity statement and T5008. At first they said Canadian account should use FIFO. After I told them CRA request ACB, then they said you could ask your accountant to make calculation with ACB but they only provide FIFO calculation to Canadian account. I heard IB provides options of ACB or FIFO to US customers. I just don’t understand why they only provide a wrong way tax statement to Canadian customers but actually they have the ability to do either method.
For my situation this year there could be a few tens of thousand dollars difference and I have to pay much more tax at front. Also on their trading platform Trader Workstation, average price is used for trading. ACB seems more reasonable and easy to use.
What I can do? Any suggestion?
Why are you relying on IB for your ACB? Brokers in Canada are not required to track your ACB. It is impossible given the CRA rules that requires you to calculate ACB across all accounts.

Just use trade confirmation report and calculate your own ACB.
Newbie
Mar 19, 2018
3 posts
Thank you very much for your suggestion. I am thinking to make my record with ACB by myself. But one thing I still have question is IB release T5008 to me and also to CRA base on FIFO. After I summit my tax return to CRA, they will see different capital gain numbers. This may create some unnecessary troubles? The T5008 which IB release does not mention it’s base on FIFO, and it seems nowhere I can explain why my number is different to T5008 when electronic net filing for my tax return. And I also don’t understand why IB insists giving Canadian customer some number which is useless to them.

Top