Abstract:
A method for tracking purchases and sales of securities to determine gains or losses on the securities using a wash sales system includes the steps of creating a database of securities purchases, adding sales of the securities to the database and comparing a sales date to a purchase date for each individual security. The system prepares a series of reports and determines character and timing of the deduction of a loss.

Description:
BACKGROUND OF THE INVENTION  
         [0001]    This invention relates generally to purchases and sales of securities and more specifically to, tax implications with respect to gains and losses from purchases and sales of securities.  
           [0002]    The term “wash sale” as used herein refers to a series of transactions whereby the loss from the sale is deferred because the security was purchased within thirty days prior to or after the sale at a loss. Section 1091 of the Internal Revenue Code (26 U.S. Code § 1091), the so-called “wash sale” rules, precludes investors from claiming a federal income tax loss on the sale of stock or securities if the investor purchases (or has entered into a contract or option to purchase) substantially identical stock or securities within a period beginning 30 days before the date of the sale and ending 30 days after such date (the “61-day period”). If the amount of stock or securities purchased is greater than the amount of stock or securities sold, only the portion of the purchase that is not in excess of the sale is consider part of the wash sale transaction. Likewise, if the amount of stock or securities purchased is less than the amount of stock or securities sold only the portion of sale that is not excess of the purchase will be considered part of a wash sale transaction.  
           [0003]    The wash sale rules apply to investors and traders disposing of stock or securities held as a capital asset, i.e., an asset that is not held in a dealer capacity. The wash sale rules apply not only to the investment activities of individual investors but also to the investment activities of regulated investment companies, popularly known as mutual funds. Mutual funds provide, among other benefits, provide individual investors with expert investment management services.  
           [0004]    In general, gain or loss on the sale of a capital asset held for more than 12 months is long-term capital gain or loss. Gain or loss on the sale of a capital asset held for 12 months or less is short-term capital gain or loss. The amount of any loss disallowed under the wash sale rules is added to the taxpayer&#39;s cost base of the stock and securities purchased. In addition, the holding period of the stock and securities sold at loss is added to the holding period of the stock and securities purchased. When such purchased stock or securities are sold in a non-wash sale transaction, the deferred loss is realized by decreasing or increasing any realized gain or loss, respectively, from the purchased stock or security. Furthermore, the addition of the holding period of the stock and securities sold at a loss may change the character of the gain or loss from the sale of the purchased stock and securities from short-term to long-term.  
           [0005]    In most cases, investors purchase a stock or security in many separate transactions. Each separate purchase is known as a “lot” or “layer.” For example, if Investor A purchases 600 shares of Company X stock on January 10 th , 300 shares on December 10 th , and  350  shares on December 15 th , Investor A would have purchased 1250 shares in three lots or layers. If on December 25 th , Investor A sells 450 shares of Company X stock at a loss, the loss would be disallowed for Federal income tax purposes because the sale, when coupled with the December purchases of the same stock, would have been a wash sale. The 450 shares sold on December 25 th  would be matched with the 300 shares purchased on December 10 th  and 150 of the 350 shares purchased on December 15 th . The deferred loss from the sale would be added to Investor A&#39;s cost base for the 300 shares purchased on December 10 th  and 150 shares purchased on December 15 th . In addition, the holding period of the shares sold would be added to the holding period of the 300 shares purchased on December 10 th  and 150 shares purchased on December 15 th .  
           [0006]    Tracking incidences of wash sales is necessary for proper determination of tax liability, as no loss can be recognized for Federal income tax purposes on a security that is the subject of a wash sale.  
           [0007]    While for a simple investor, such transactions are easy to track, asset management companies, for example, may participate in thousands of such transactions over the course of a fiscal year. Tracking of wash sales, can therefore be a complex and time consuming task, especially for companies who specialize in the buying and selling of stock and other securities.  
           [0008]    It would be desirable to provide a method and a system with the capability to track the purchase of stock or other securities that are purchased within a specified timeframe of a sale, at a loss, of the same stock or security. It would be desirable to have the system and method track the purchased stocks and other securities until they are all completely sold. It would be still further desirable that such a system would provide an output that matches up the sales and purchases in a format that a user of the system could use to identify opportunities for wash sales so that they can be identified and preferably avoided.  
         BRIEF SUMMARY OF THE INVENTION  
         [0009]    The Wash Sales system described herein is configured to identify/ print records of securities sales whereby the loss from the sale of a security is deferred because the security was purchased within the 61-day period. The system, thus, precludes the user from erroneously claiming a loss that is nondeductible for tax purposes. The system is further configured to track those securities purchases causing the wash sales until they are sold in a transaction that is not itself a wash sale. The system, thus, permits the user to determine the correct time the loss arising from the sale of securities is deductible. The system is able to track for wash sales by creating a database of securities purchases, adding sales of the securities to the database and comparing a sales date to a purchase date for each individual security.  
           [0010]    Initially, an external mainframe is used to run a transaction program that prepares a file of trades (buy and sale transactions) covering a user specified period that is then transferred to the wash sales system. For example, if a user wanted to identify wash sales occurring during the period Oct. 01, 1998 to Sep. 30, 1999, the user would account for the 61-day period by specifying the period from Sep. 1, 1998 to Oct. 30, 1999 in order to capture all wash sales arising during the review period.  
           [0011]    After the wash sale system receives the trades file from the mainframe, it generates several reports, including a “wash sale review” report, an “expired and deferred wash sales” report, as well as, an “opening balance” report. The system further allows a user to change Committee for the Uniform Securities Practices (CUSIP) or lot numbers in the history table (i.e., the table containing the unexpired and deferred wash sales from prior year system reports). When such changes are requested, the system provides feedback as to the success or failure of the requested change.  
           [0012]    The system also allows users to maintain a list of funds for which Wash Sales reports can be generated. This list is automatically copied to the external mainframe for use in determining which funds are included when the mainframe creates trades files. 
       
    
    
     BRIEF DESCRIPTION OF THE DRAWINGS  
       [0013]    [0013]FIG. 1 is a system diagram;  
         [0014]    [0014]FIG. 2 is a network based system diagram;  
         [0015]    [0015]FIG. 3 is a diagram showing options available to a wash sale system user;  
         [0016]    [0016]FIG. 4 is an exemplary example of a user login screen;  
         [0017]    [0017]FIG. 5 is an exemplary example of a main menu screen;  
         [0018]    [0018]FIG. 6 is an exemplary example of a date range entry screen;  
         [0019]    [0019]FIG. 7 is an exemplary example of a funds selection screen;  
         [0020]    [0020]FIG. 8 is an exemplary example of a wash sales review report;  
         [0021]    [0021]FIG. 9 is an exemplary example of an expired and deferred wash sales report;  
         [0022]    [0022]FIG. 10 is an exemplary example of a opening balances report selection screen;  
         [0023]    [0023]FIG. 11 is an exemplary example of a opening balances report;  
         [0024]    [0024]FIG. 12 is an exemplary example of a change CUSIP number screen;  
         [0025]    [0025]FIG. 13 is an exemplary example of a lot number changes screen; and  
         [0026]    [0026]FIG. 14 is an exemplary example of a fund maintenance screen. 
     
    
     DETAILED DESCRIPTION OF THE INVENTION  
       [0027]    Set forth below is a description of exemplary methods and systems for facilitating tracking of wash sales. While the methods and systems are mostly described in the context of wash sales, the methods and systems are not limited to practice in connection with only wash sales tracking. The methods and systems can be used, for example, in connection with purchases and sales tracking for stocks, bonds and many other different types of securities. Included are details regarding exemplary hardware architectures (FIGS. 1 and 2), an exemplary process flowchart illustrating system functionality (FIG. 3), and exemplary screen shots (FIGS.  4 - 14 ) displayed by the exemplary system to a user desiring to facilitate wash sales. Although specific exemplary embodiments of methods and systems for accomplishing wash sales are described herein, the methods and systems are not limited to such specific exemplary embodiments.  
         [0028]    Hardware Architecture  
         [0029]    [0029]FIG. 1 is a block diagram of a system  10  that includes data flow for the tracking of wash sales. System  10  includes a mainframe  12  and a computer  14 , both of which are interfaced to a database server  16 . Mainframe  12  causes to be stored within a database (not shown) within database server  16  a list of all trades of stocks, etc. that have transpired. Computer  14  is configured to request from mainframe  12  trade activity, that is, purchases and sales of a selected group of securities (a fund list). Computer  14  receives the updated list of trade activities for selected funds from database server  16  based upon commands received from mainframe  12 . Computer  14  is further configured to store the updated list within a database (not shown) within computer  14  and to compare sales and purchases of securities to determine existence of any wash sales. If wash sales are found to exist, computer is configured to present to the user reports  18  which detail the wash sales as described in detail below. In one embodiment, computer  14  and mainframe  12  are connected via a secure link for transfer of files describing trade activity. In an alternative embodiment, and as described below, computer  14  is one or more computers including a web browser, and mainframe  12  is accessible to computers  14  via a network such as an intranet or a wide area network such as the Internet. In an alternative embodiment, computers  14  are servers for a network of user devices.  
         [0030]    As described above, in one embodiment, computers  14  are interconnected to a network, such as a local area network (LAN) or a wide area network (WAN), through many interfaces including dial-in-connections, cable modems and high-speed lines. Alternatively, computer  14  is any device capable of interconnecting to a network including a web-based phone or other web-based connectable equipment. In one embodiment, mainframe  12  includes database server  16  and the database (not shown) is stored on database server  16 . In an alternative embodiment database (not shown) is stored remotely from mainframe  12 .  
         [0031]    [0031]FIG. 2 is a block diagram of a network based system  22 . System  22  includes mainframe  12  and a server  23  configured as a server sub-system and computers  14 . In the embodiment shown, server  23  includes an application server  24 , a web server  26 , a fax server  28 , a database server  29 , a directory server  30 , and a mail server  32 . A disk storage unit  34  is coupled to database server  29  and directory server  30 . Servers  24 ,  26 ,  28 ,  29 ,  30 , and  32  are coupled in a local area network (LAN)  36 . In addition, a system administrator work station  38 , a work station  40 , and a supervisor work station  42  are coupled to LAN  36 . Alternatively, work stations  38 ,  40 , and  42  are coupled to LAN  36  via an Internet link or are connected through an intranet.  
         [0032]    Each work station  38 ,  40 , and  42  is a personal computer including a web browser. Although the functions performed at the work stations typically are illustrated as being performed at respective work stations  38 ,  40 , and  42 , such functions can be performed at one of many personal computers coupled to LAN  36 . Work stations  38 ,  40 , and  42  are illustrated as being associated with separate functions only to facilitate an understanding of the different types of functions that can be performed by individuals having access to LAN  36 .  
         [0033]    Mainframe  12  and server  23  are configured to be communicatively coupled to various individuals or employees  44  and to third parties, e.g., users,  46  via an ISP Internet connection  48 . The communication in the exemplary embodiment is illustrated as being performed via the Internet, however, any other wide area network (WAN) type communication can be utilized in other embodiments, i.e., the systems and processes are not limited to being practiced via the Internet. In addition, and rather than a WAN  50 , local area network  36  could be used in place of WAN  50 .  
         [0034]    In the exemplary embodiment, any employee  44  or user  46  having a work station  52  can access mainframe  12  and server  23 . One of computers  14  includes a work station  54  located at a remote location. Work stations  52  and  54  are personal computers including a web browser. Also, work stations  52  and  54  are configured to communicate with mainframe  12  and server  23 . Furthermore, fax server  28  communicates with employees  44  and users  46  located outside the business entity and any of the remotely located customer systems, including a customer system  56  via a telephone link. Fax server  28  is configured to communicate with other work stations  38 ,  40 , and  42  as well.  
         [0035]    [0035]FIG. 3 is a flow chart  100  illustrating processes available to users of wash sale system  10 . After a customer logs in  102  to system  22 , the system prompts the customer, e.g., via a main menu display that prompts the customer for selection to a type of transaction desired to be completed. The transaction can, for example, be a generation of a number of main reports  106  (described below), an opening balance report  108 , a change to a Committee for the Uniform Securities Practices (CUSIP) number  110 , a change to a lot number  112  or fund maintenance  114 . Of course, the system is not limited to any one specific type of transaction.  
         [0036]    User Interfaces  
         [0037]    Users of wash sales system  10  have access to the application, typically, and in one embodiment, as an icon on their desktop. Selection of the icon causes a login screen to appear. FIG. 4 is an exemplary example of a user login screen  120  where the user enters their user id and password which has been provided a database administrator. A user id and password are submitted, and system  10  attempts to validate the user id and password.  
         [0038]    After entry of a valid user id and password, a wash sales main menu will be presented to the user. FIG. 5 is an exemplary example of a main menu screen  140 . Main menu screen  140 , in one embodiment, is a selection list of options available to the user. Wash sales functions in the embodiment shown in FIG. 5 include a main reports function, an opening balance report function, a change Committee for the Uniform Securities Practices (CUSIP) number function, a change lot number function and a fund maintenance function.  
         [0039]    Main Reports  
         [0040]    [0040]FIG. 6 is an exemplary example of a date range entry screen  160  presented to the user after selection of the main reports function from main menu screen  140  (shown in FIG. 5). Screen  160  is a form presented to the user for date range data entry. Date ranges entered are the date ranges for a fiscal year. For example, if a fiscal year starts on October 1, the starting date entered would be “10/01/yy” and the ending date would be “09/30/yy” of the following year. Upon submission of the selected date range to system  10  (and selection of the funds interested in, described below), a wash sales review and an expired and deferred wash sales report are generated. The user has an option to print one or both of the review and the report.  
         [0041]    A “Final Run” option on screen  160 , which can be selected by the user, adds deferred wash sales to the history table. Entries into the history table appear on the succeeding year&#39;s expired and deferred wash sales report as a “BUY” representing a deferred loss. If such “BUY” is sold in the succeeding year, the deferred loss will be allowed for income tax purposes, otherwise, the deferred loss will remain outstanding.  
         [0042]    Text box  162  shows a date and time stamp of the last mainframe trades selection transaction. The user can check this screen periodically to check whether or not the trades selection transaction just submitted has been completed, and the trades are available to be loaded into the server from the mainframe. When the transmission to the server finishes, the latest date and time stamp are displayed on screen  160 .  
         [0043]    [0043]FIG. 7 is an exemplary example of a funds selection screen  180 . As stated above, one or more funds for the desired reports can be selected by the user. In one particular embodiment, all funds are selected and funds are deselected by removing a check from a “Select All” checkbox. Then user then manually selects the funds for the report.  
         [0044]    A “reload” option on screen  180 , if selected, loads the trades from the last trade selection transaction stored on mainframe  12  (shown in FIGS. 1 and 2), including the previously specified date range, and reloads those trades into a trades table within database  18  (shown in FIG. 1). The “reload” option, if not selected, saves the user a considerable amount of time, by not transferring trade files from the mainframe  12  (shown in FIGS. 1 and 2).  
         [0045]    A “lines per page” data entry field on screen  180 , in one embodiment, is set by system  10 , to an appropriate value for the user&#39;s printer. Screen  180  offers the user, in one embodiment, choices to either generate only the review report or to generate both the review report and a expired and deferred wash sales report, (both described below) as desired by the user. After creating the reports, the user is presented again with main menu  140  (shown in FIG. 5). In one exemplary embodiment, the reports are made available to the user as an option on a taskbar (not shown), which, by selection opens the report(s) for inspection and/or printing. In one particular embodiment, the reports are automatically saved, in a spreadsheet format, with the names which uniquely identify the reports and which include the dates and times when the reports were created. In another embodiment, the reports can also be saved by the user under file names selected by the user.  
         [0046]    [0046]FIG. 8 is an exemplary example of a wash sales review report  200 . One embodiment of a wash sales review report, as shown in report  200 , contains three headings, “SALE APPLIED TO WASH SALE”, “LAYERS SOLD AT A LOSS”, and “BUY CREATING WASH”. The headings describe a genesis of each of the listed wash sales.  
         [0047]    In a “SALE APPLIED TO WASH SALE” transaction, the sale at a loss that is matched with a purchase to create a wash sale is identified. In these cases, a wash sale arises because the investor would have sold stock or securities at a loss that the investor purchased within the 61-day period. The letter “S” in the file extracted from the mainframe  12  (shown in FIGS. 1 and 2) identifies these transactions. The transactions will have occurred within the user-entered date range, possess a user-selected fund code and have at least one qualifying “BUY CREATING WASH” transaction associated with it, which is identified by each of the transactions having the same CUSIP number. If the transaction has a broker code indicating that the sale was a “Redemption in Kind” or a “paydown,” however, it is not a “SALE APPLIED TO WASH SALE” transaction, as no sale would have occurred for tax purposes.  
         [0048]    The “LAYERS SOLD AT A LOSS” heading includes details (number of shares, purchase date of lot or layer, and potential wash sale loss) of the lots or layers of the number of shares in an amount sold column under the heading “SALE APPLIED TO WASH SALE”.  
         [0049]    In a “BUY CREATING WASH” transaction, a purchase is matched with a sale at a loss to create a wash sale. In these cases, a wash sale arises because the investor would have purchased stock or securities within the 61-day period in which the investor previously sold such stock or securities at a loss. The letter “B” in the file extracted from the mainframe  12  (shown in FIGS. 1 and 2), in one embodiment, identifies these transactions. The transactions will have occurred within the user-entered date range. In addition, the find, asset group and CUSIP number of the stock or securities purchased would match the fund, asset group and CUSIP number of the substantially identical stock or securities sold.  
         [0050]    Further, for a “BUY CREATING WASH” transaction of a particular security of a fund, the cost base has to be greater than zero and the fund, asset group, CUSIP number, purchase date and lot number cannot have been party to a wash sale transaction on the most recent final run&#39;s review report for the fund. Also, there needs to be at least one layer for the sale, and the layers in question must have a loss.  
         [0051]    Cost base is calculated as the cost per share equal to the cost of the total number of shares bought in the lot divided by the number of shares in the lot and zero is used for cost per share if the total number of shares bought equals zero.  
         [0052]    If the investor purchases more shares than needed to create a wash sale, then only the shares needed to create the wash sale transaction are listed in a “Wash Amount” column on report  200 . In all other cases, the total number of shares purchased will equal the total number of shares listed in the “Wash Amount” column. The “Cost” column in report  200  is the cost base of the number of shares shown in the “Wash Amount”.  
         [0053]    System  10  examines the “LAYERS SOLD AT A LOSS” from the oldest to most recent date of purchase. The letter “D” (detail) in the file extracted from the mainframe  12  (shown in FIGS. 1 and 2), in one embodiment, identifies these transactions. For each layer examined, if there are more shares available in the layer then the “Wash Amount”, the “Loss” calculated by system  10  will be equal to the number of shares actually needed multiplied by the loss per share in the layer. If the layer does not have more shares than are needed, then the loss from the layer is calculated as being equal to the total number of shares available in the layer multiplied by the loss per share in the layer. As a result of either calculation, system  10  reduces the number of shares available in the layer by the amount of shares used from the layer, so as to avoid counting these shares in future wash sale transactions. If still more shares are needed for the “Wash Amount,” system  10  repeats the above process using the next most recent layer (if available).  
         [0054]    A total loss is calculated for each layer used for the “Wash Amount” and the accumulated loss is displayed (or printed) under the “Loss” column. The system accumulates the loss deferred from each layer in either a “short term” bucket, if the stock or security has not been held for more than 12 months, or a “long term” bucket, if the stock or securities have been held for more than 12 months. System  10  accumulates separate totals for short-term and long-term losses which are needed when the “BUY CREATING WASH” column is written to a file for inclusion on the “EXPIRED AND DEFERRED WASH SALE REPORT” (described below).  
         [0055]    If the layer was sold more than 12 months after the layer was purchased, the loss is denoted on report  200  as “L” (Long-term), otherwise the loss is denoted as “S” (Short-term). If the shares traded on the layer is not equal to zero, system  10  calculates an loss per share for the layer equal to the loss on the layer divided by the shares traded on the layer. Otherwise, system  10  is configured to use zero for loss per share. Loss is used in the calculation of loss for “BUY CREATING WASH” transactions.  
         [0056]    [0056]FIG. 9 is an exemplary example of an EXPIRED AND DEFERRED WASH SALE report  220 , which includes a “BUY CREATING WASH” heading and an “EXPIRED” heading.  
         [0057]    The data shown under the “BUY CREATING WASH” heading, including, trade date, lot, wash amount, cost, loss, is traceable to the data under the “BUY CREATING WASH” heading on the current “WASH SALE REVIEW” report  200  (shown in FIG. 8) and the deferred wash sales from the previous year&#39;s “EXPIRED AND DEFERRED WASHSALES” report, if applicable.  
         [0058]    If further details are necessary, the user would select “SELL” and “PAYD” type “D” (“Detail”) transactions from the transaction data in the mainframe  12  (shown in FIGS. 1 and 2) which match the purchased stock or securities by fund code, asset group, CUSIP, lot number, and purchase date. The trade date must be within the range of dates entered by the user to be selected. These transactions are the pool from which the expirations are selected and printed.  
         [0059]    For each purchase that creates a wash sale (a transaction found under the heading “BUY CREATING WASH”), system  10  gathers all of the matching layers from the current “WASH SALE REVIEW REPORT” or the previous year&#39;s deferred wash sales (whichever is applicable). To qualify, the layers must all have shares which were not used from those layers toward the “Buy Creating Wash” on the review report. The layers are used for calculating the loss on the expirations only, and are not included on this report.  
         [0060]    If the total of the shares traded on the layer is not equal to zero, system  10  calculates an loss per share for the layer equal to the loss on the layer divided by the total number of shares traded on the layer; otherwise, it uses zero for the loss per share. The loss is used in the calculation of the loss for under the “EXPIRED” heading.  
         [0061]    System  10  is further configured to examine the expirations for the “buy,” starting with the earliest. If there are still shares available from the prior year that are shown in the expiration report to apply against the “buy”, system  10  will determine as many shares as it needs from the expiration under “Amount” and include that number of shares on report  220  and in printouts of the reports. If all of the shares in the expiration column are needed, system  10  will use all of the shares in the calculation. For example, shares from an expiration may only be used once, i.e., 100 shares used from expiration “A” may be used against purchase “A” but may not be used again for purchase “B”.  
         [0062]    System  10  further calculates the loss on the shares for each expiration by looping through the layers, starting with the earliest. If a layer has shares that are still available (i.e., have not yet been allocated to another expiration), system  10  is configured to use as many of the shares as needed for the expiration. For the number of shares used from each layer, system  10  calculates the loss on those shares by multiplying the number of shares used from the layer by the loss per share that was previously calculated for the layer. System  10  also calculates totals for the number of shares used from all layers for the expiration, as well as the total loss on those shares from all layers for the expiration. These totals are displayed (and printed) under the “Amount” and “Loss” columns. The amount of shares available from each layer is reduced by the amount used. Therefore, shares from a layer may not be used for more than one expiration.  
         [0063]    A determination of how much of the expiration&#39;s loss is short term and how much is long term by system  10  is determined for each layer used. For example, if the purchase date appearing on the original “wash sales review report” (i.e., the review report on which the “buy creating wash” originally appeared) is not greater than the sale date appearing on that report, then system  10  calculates the number of days between the expiration sale date and the layer&#39;s purchase date used in the loss calculation. In other cases, system  10  calculates a number of days between the layer&#39;s purchase date and the original sale date on the review report and adds to it the difference between the original purchase date on the review report and the expiration sale date.  
         [0064]    In either case, if the number of days calculated is less than 365 then it is short term (“S”), otherwise it is long-term (“L”). It is possible that one or more layers for an expiration sale could be “S” and one or more other layers “L”, depending on the original sale date from the original review report. When this situation occurs, the amount of loss for each type is shown on report  220 .  
         [0065]    The above descriptions are more easily illustrated by example.  
         [0066]    A first example is a purchase which created the wash sale has a purchase date earlier than the layer&#39;s sale date, where the original purchase date of the layer sold is Oct. 5, 1998, the purchase date of purchase which created the wash sale is Dec. 1, 1999, the sale date of the layer which occurred within 30 days (before or after) of the purchase date is Dec. 15, 1999, and the date when the Dec. 01, 1999 purchase was sold (also known as the expiration sale date) is Jan. 31, 2000.  
         [0067]    Since the Dec. 1, 1999 purchase date occurs before the layer&#39;s Dec. 15, 1999 sale date, system  10  calculates a difference in days between Jan. 31, 2000 and Oct. 5, 1998. Since the difference is clearly more than 365 days, the loss on this layer is Long-Term (“L”).  
         [0068]    A second example is a purchase which created the wash sale has a purchase date later than the layer&#39;s sale date, where the original purchase date of layer sold is Oct. 5, 1998, the purchase date of purchase which created the wash sale is Dec. 20, 1999, the sale date of layer which occurred within 30 days (before or after) of the purchase date is Dec. 15, 1999, and the date when the Dec. 20, 1999 purchase was sold (also known as the expiration sale date) is Jan. 31, 2000.  
         [0069]    Since the Dec. 20, 1999 purchase date occurs after the layer&#39;s Dec. 15, 1999 sale date, system  10  calculates a difference in days between Oct. 5, 1998 and Dec. 15, 1999 and adds that difference to the difference between Dec. 20, 1999 and Jan. 31, 2000. The difference in days between Dec. 15, 1999 and Dec. 20, 1999 is not included because the stock was not held during this period of time. Since the total difference is clearly more than 365 days, the loss on this layer is still Long-Term (“L”).  
         [0070]    On report  220 , in one embodiment, if the broker code for the expiration is for a “redemption in kind”, an asterisk “*” will appear next to the loss-type indicator. A “book loss” shown on report  220  is a pro-rated, calculated amount equal to the ratio of the amount of shares expired (i.e., used) for the expiration over the total number of shares sold, multiplied by the book loss associated with the total number of shares sold.  
         [0071]    If the amount of stock or securities sold is less than the amount purchased, then a wash sale occurs. In these cases, system  10  creates a “Deferred Loss” amount equal to the amount of the wash sale. Technically, the system compares the expired amount total for any “BUY CREATING WASH” (shown on report  220 ) to the “Wash Amount” for the “buy.” If the former is less than the latter, then a “deferred loss” equal to the difference between the loss on the “BUY CREATING WASH” and the calculated loss total on the associated expirations is created. Alternatively, if there are no expirations for the “BUY CREATING WASH”, then the “Deferred Loss” is equal to the loss on the “BUY CREATING WASH”.  
         [0072]    For example, if expiration sale dates are between January 1 and October 31 (for funds with a fiscal year-ending date of December 31st ) or between October 1 and October 31 (for funds with a fiscal year-ending date of September 30th ), then fund totals for these expiration amounts and calculated losses (split by loss type) are shown on report  220 . If any expirations are for “redemptions in kind”, then fund totals for these calculated losses (split by loss type, long term or short term) are shown on report  220 . If there is a “Deferred Loss,” any layers with available shares remaining are saved to a wash sales file with the data from the “BUY CREATING WASH” section. The “BUY CREATING WASH” data will appear on next year&#39;s “EXPIRED AND DEFERRED WASH SALES” report for these funds; the available shares from the layers will be used to calculate the loss for any expirations (if any) which appear on the same report.  
         [0073]    [0073]FIG. 10 is an exemplary example of an opening balances report selection screen  240  which permits the user to select a particular set of funds on which a report will be run, for example, funds ending on September 30 or December  31 . Screen  240  also shows the years for which historical data on the funds is available. Also on screen  240 , selection of “generate opening balances” creates a spreadsheet for the report.  
         [0074]    [0074]FIG. 11 is an exemplary example of an opening balances report  260 , which includes all of the deferred “BUY CREATING WASH” amounts which appeared on the final run of the “EXPIRED AND DEFERRED WASH SALE” report for the year and set of funds selected by the user.  
         [0075]    [0075]FIG. 12 is an exemplary example of a change CUSIP (Committee for the Uniform Securities Practices) number screen  280  which allows a user to change a CUSIP number within a history table (i.e., the cumulative unexpired and deferred wash sales tables). To change a CUSIP number, the user needs to specify a year, the CUSIP number, an asset group and the fund code of the lot(s) to be changed, as well as provide the a new CUSIP number. If the CUSIP specified is not in the history table, system  10  indicates an error. If at least one matching record is found, system  10  indicates how many records were changed.  
         [0076]    [0076]FIG. 13 is an exemplary example of a lot number changes screen  300  which allows the user to change a lot number within a history table. To change a lot number, the user needs to specify a year, a CUSIP number, an asset group, a fund code, a trade date and the lot number of the lot to be changed, as well as a new lot number. If the lot number to be changed is not in the table, system  10  indicates an error. If at least one matching record is found, system  10  indicates how many records were changed.  
         [0077]    [0077]FIG. 14 is an exemplary example of a fund maintenance screen  320  which allows a user to add new funds, change a fund description and/or fiscal-ending month, or delete a fund. Changes to a fund description, in one embodiment, is accomplished by highlighting the existing fund description and/or fiscal-ending month, selecting “change”, entering a new description in an appropriate data field and then selecting “update”.  
         [0078]    To delete a fund, the user highlights the fund and then selects “delete”. System  10  displays the current fund descriptive data. A second selection of “delete” to confirms the deletion. To add a fund, select “add”, enter the data for the new fund in the appropriate data fields and select “add” again. Additions, changes, or deletions are uploaded to the mainframe for use in the next trade transaction.  
         [0079]    While the invention has been described in terms of various specific embodiments, those skilled in the art will recognize that the invention can be practiced with modification within the spirit and scope of the claims.