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Models and Allocations: Gain/Loss Information

Gain/Loss Overview

To help you understand the tax implications of managing a Model Folio, our system makes it easy for you to view capital gain and loss information for Model Folios. We keep detailed records of every buy and sell order executed for models, tracking all gains and losses.

To make managing a Model Folio even easier, we give you control of the tax consequences when you sell securities. We let you choose from eight different options, that allows you to maximize gains and/or losses, short-term and/or long-term in way that are most appropriate for the model.

Remember! The gain/loss options you choose when you manage a model will likely differ from the individual “tax-lot” options that investment advisors select for their client. A model manager may choose the “First-in, First Out” method to sell securities that were purchased earliest, but an individual client who is subscribed to the model can have a different tax-lot selling option.

For model managers and clients, our system will automatically select the minimize gain, maximize loss option.

What are the eight FOLIOfn tax lot methods I can choose from?

  1. First In – First Out sells the shares you bought first.
  2. Last In – First Out sells the shares you bought last.
  3. Minimize Gain or Maximize Loss sells the shares which produce the smallest gain or largest loss.
  4. Maximize Gain or Minimize Loss sells the shares which produce the largest gain or smallest loss.
  5. Minimize Long-Term Gain sells the shares that you have held for more than one year first. From this group, the shares that produce the smallest gain will be sold first. If you do not have enough long-term shares to meet your sell orders, shares you have held for one year or less will be sold.
  6. Minimize Short-Term Gain sells from the shares you have held for one year or less first. From this group, the shares that produce the smallest gain will be sold first. If you do not have enough short-term shares, shares you have held for more than one year will be sold.
  7. Maximize Long-Term Gain sells from the shares you have held for more than one year first. From this group, the shares that produce the largest gain will be sold first. If you do not have enough long-term shares, some of the shares you have held for one year or less will be sold.
  8. Maximize Short-Term Gain sells from the shares you have held for one year or less first. From this group, the shares that produce the largest gain will be sold first. If you do not have enough short-term shares, some of the shares you have held for more than one year will be sold.

How do I select among your eight choices?

We give you eight choices for controlling your taxes that are explained above.

When you open an account, we automatically select a choice that applies universally to all your sell orders, Minimize Gain or Maximize Loss. You can change this setting by selecting Modify Settings after you select the name of a Model on your Model Folios page. The change you make will apply every time you sell shares in that Model.

If you want to maintain a universal setting and change the setting for just one trade order, you can do so from the page where you place a trade. The setting will change for that one order but automatically revert back to your universal setting for all future sales.

How can I view unrealized long- or short-term gains and losses?

  1. Select the Model Folios tab.
  2. Select the name of the Model Folio you want to view.
  3. Select View Gain/Loss Information.
  4. On the View Gain/Loss Information page, select the button next to View Unrealized Gains/Losses then select View Information.

How can I view the estimated capital gains and losses as I am placing a trade?

  1. The Preview and Place Order page shows the estimated short and long-term capital gains for your order.
  2. Select the Tax Lot Details button on the Preview and Place Order page to see short and long-term capital gains for each security.

How can I view the actual capital gains and losses for an executed trade?

  1. Select the Model Folios tab.
  2. Select the name of the Model Folio that holds the security you want to view.
  3. Select View Gain/Loss Information.
  4. On the View Gain/Loss Information page, select the button next to View realized gains/losses then select View Information.