If you do all your stock and mutual fund investing inside your traditional IRA or company retirement plan, you don't have to worry about taxes. One day you'll start withdrawing, and your contributions and gains will be taxed as ordinary income. But since you're reading TheStreet.com, it's likely that you hold stocks or mutual funds outside a retirement plan. If that's the case, tax time can be a nightmare. Whether you're a frequent trader or a long-term investor, you need to find your "cost basis" to calculate your gains -- or losses -- when you sell. Brokerage firms and mutual fund companies will send you a 1099 form giving the amount of the sales proceeds of all your transactions. But you're in charge of matching that number with your cost basis (which is frequently different than your original cost because of dividends or splits) to determine your taxable gain or loss. The process of determining taxes becomes particularly complicated if:
You purchased the same stock or fund shares on different dates
You traded frequently in many stocks, or even the same stock
You purchased shares years ago and can't find your original purchase confirmation
The stock has split, or the company was merged or sold
A portion of your dividend is considered a "return of capital" (the case in many REITS)
You inadvertently created a "wash sale" -- the sale of a stock to establish a loss, but the repurchase of the same security within 30 days of the sale.
Now there's a simplified way to track your stock-trading tax liability. GainsKeeper.com provides an online tracking system designed specifically to provide all the information you'll need for reporting your profits and losses. GainsKeeper not only tracks the cost basis of your stocks, but adjusts that cost to account for corporate actions such as stock splits and dividends. It even monitors securities changes that result from mergers and spinoffs, which can be incredibly complicated. For example, in Verizon's ( VZ) purchase of MCI, holders of every MCI share received 0.5743 shares of Verizon and $2.74 in cash. Or consider Ashland 's ( ASH) sale of its stake in Marathon Ashland Petrolelum to Marathon Oil ( MRO) last year. Every share of Ashland became one share of new Ashland and 0.2364 shares of Marathon! Figuring your cost basis would be a nightmare without help from GainsKeeper.