Worksheets

Describes the worksheets and reports Interactive Brokers provides, including the Annual Statement and Dividend Report

All US citizens and permanent legal residents or "green card" holders are considered US persons by the IRS and are required to complete Form W-9, Request for Taxpayer Identification Number and Certification, when you apply to open an Account. Entities formed or operating in the United States are also treated as US persons and must provide an Employer Identification Number. If you are an individual, include your social security number (SSN). If you are an entity, your employer identification number (EIN) is required.

US resident aliens will also be required to complete Form W-9 and provide a social security number (SSN). A resident alien is considered a US resident if one of the following criteria has been met: you are a lawful permanent resident issued a resident alien registration card ("green card"), or you are an individual with a valid nonimmigrant visa who resides in the US for a required period of time and you have established a substantial presence. Refer to IRS Publication 519, US Tax Guide for Aliens, for a further discussion.

Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, allows you to certify that you are a not a US person and claim treaty benefits under an existing tax treaty between the US and your country of tax residence, if applicable.

You should complete Form W-8BEN if:

• You are opening an individual or joint account and are not a US Citizen, green card holder or legal resident of the US.
• You are the representative of an entity that is not organized in the US but is recognized as a corporation under US law. Refer to a list of entities considered to be per se corporations.
• You represent an entity, wholly owned by another and you have made an election on IRS Form 8832 to be disregarded for US tax purposes.
• You are a foreign tax-exempt organization or foreign private foundation that is not a recognized US charity.
• You are the trustee of a complex trust as defined under US law.
• You are the representative of an estate.

Part I identifies the name, location and the beneficial owner, which for purposes of Forms W-8, is the owner of the account.

In Part II you must certify your country of tax residence or incorporation in order to claim tax treaty benefits, if you are the resident of a treaty country.

Certificate of Foreign Person's Claim for Exemption From Withholding on Income Effectively Connected With the Conduct of a Trade or Business in the United States.

If you are a foreign person (includes foreign corporation, partnership, tax-exempt organization or private foundation) and the owner of income from US operations, you may claim the income is effectively connected with a trade or business in the US. Complete W-8ECI if you are a subsidiary of a foreign organization doing trading business with IB for your US operations.

You should complete a Form W-8ECI if:

• You are opening account for a business that is not a US company but is operating in the US. All funds in the account must be from US operations.

Part I identifies the name of the account owner, type of entity, permanent location, mailing addresses, Tax ID number and type of income identified as effectively connected income. You must provide a US taxpayer identification number on Line 6 of the form.

You should complete Form W-8IMY if:

• You represent a broker opening an account for your customers. You will be asked to complete this form for your relationship with your customers and the appropriate W-8 form for each of your customers.
• Additionally, you will also be asked to complete the appropriate form for your master account representing your business entity type.
• You represent a Non-qualified Intermediary (non-QI), non-withholding partnership as defined under US law. As a partnership, the entity you represent does not pay taxes directly but the owners (partners) pay all tax liabilities.
• In addition to completing Form W-8IMY, you will be asked to complete an appropriate tax registration form (W-8 or W-9) for each of your partners.
• If you are the trustee of a simple, non-grantor trust. A simple trust pays all income to the beneficiaries annually and the beneficiaries of the trust are not the same person who placed the income in trust. If the owner of income paid to a foreign complex trust is the trust itself, then you should complete Form W-8BEN.
• In addition to completing Form W-8IMY, you will be asked to complete an appropriate tax registration form (W-8 or W-9) for each trust beneficiary.
• You are a withholding foreign partnership or Qualified Intermediary (QI). The form indicates that you are not the owner of the taxable payments..

Part I identifies the name, type of entity and permanent residence of the foreign intermediary, foreign partnership or US Branch.

Part II is completed by all Qualified Intermediaries and a QI-EIN must be provided on line 6.

Part III must be completed by all non-Qualified Intermediaries.

Part V requires the withholding foreign partnership or withholding foreign trust to complete this section. In addition, a US taxpayer ID must be provided on Line 6.

Part VI is completed by the nonwithholding foreign partnership, simple trust or grantor trust. In addition, the partnership or trust must provide the required documents and a withholding statement for each beneficial owner it represents.

Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding.

• If you are a foreign tax-exempt organization or foreign private foundation you may claim a reduced rate of withholding or an exemption from US withholding as a resident of a treaty country.

• A foreign charitable organization must be recognized by the Internal Revenue Service as a tax-exempt organization under section 501(c)(3). Required documentation includes your IRS determination letter.

• A foreign tax-exempt organization or foreign private foundation that is not a qualified US charity may not be in a treaty country and should complete Form W-8BEN.

You should complete form W-8EXP if:

• You represent a foreign charitable organization that is also a qualified US charity or you are a foreign private foundation.

Part I identifies the name, type of entity and permanent location of the foreign tax-exempt organization.

Form 1099-INT, Interest Income, reports interest income (including tax-exempt interest dividends) paid to your securities and commodities account during the year.

Box 1 reports interest income from US corporate bonds, credit balance interest and other interest bearing securities, exclusive of US savings bond and US Treasury obligations. Interest on US savings bonds and Treasury obligations is reported separately in Box 3, for state reporting purposes.

Any US tax withheld from your income is reported in Box 4. We do not report amounts in Box 5 for investment expenses of single class REMICs. Box 8 reports tax-exempt interest from municipal bonds, money market funds, including tax-exempt interest on dividends from a mutual fund or other regulated investment company (RIC). Tax-exempt interest from private activity bonds, taxable for purposes of the Alternative Minimum Tax (AMT), is reported in Box 9.

Form 1099-OID, Original Issue Discount, reports the amortization of bond interest on discounted bonds taxable annually. OID is the difference between an obligation’s stated redemption price at maturity and the issue price of the debt instrument. Debt instruments such as bonds or notes, debentures, certificates and other evidence of indebtedness, with terms of more than one year, generally have OID when the instrument is issued for a price that is less than its stated redemption price at maturity. OID is taxable as interest over the life of the obligation. Although you may not have received a cash payment from the obligation during the year, if the obligation was originally issued at a discount, IB is required to report a portion of that OID each year it is held in your account.

Box 1 reports the OID on obligations for the year you owned it. Box 2 shows stated interest (that is not OID) on the obligation paid or credited for

the year. If you disposed of the obligation or acquired it from another holder between interest dates during the year, refer to IRS Publication 550, Investment Income and Expenses, for information on how to report accrued interest. Box 3 shows interest or principal forfeited if you withdrew the money before the maturity date of the obligation. Backup income tax withheld on interest paid to your account will be reported in Box 4. Box 6 reports original issue discount on US Treasury obligations. Refer to IRS Publication 1212, Guide to Original Issue Discount (OID) Instruments, for information on how to calculate OID. Consult your tax advisor on how to report on your federal income tax return and to determine whether amounts are exempt from state and local income taxes.

Form 1099-DIV, Dividends and Distributions, reports ordinary dividends credited to your account during the year, short-term capital gains and total capital gains distributions, as well as nondividend distributions (returns of capital) and dividends paid by foreign corporations.

Box 1a reports the total ordinary dividend payments, which includes short-term capital gains. Box 1b reports “qualified dividends,” the portion of total ordinary dividends that may be eligible for reduced dividend tax rates. IB has not determined that payments reported in Box 1b meet the requirements for lower capital gains tax rates to apply. Refer to IRS Publication 550, Investment Income and Expenses, for information on how to make this determination and consult your tax advisor. Box 2a is the amount of long-term capital gain distributions from mutual funds, regulated investment companies (RICs) or Real Estate Investment Trusts (REITs). Box 3 reports nondividend distributions which represent return of capital distributions. Returns of capital are non-taxable distributions.

Any US tax withheld on dividend income is reported in Box 4. Box 6 reports the foreign tax paid and/or withheld at the source related to investments

made outside the US; for example, dividends paid on American Depository Receipts (ADRs) or Canadian securities. If you own a mutual fund that holds foreign investments you may have foreign tax withheld. The country to which the tax was paid is listed in Box 7. Refer to IRS Publication 514, Foreign Tax Credit for Individuals, for further guidance and consult your tax advisor.

Dividends declared and not yet paid at year-end are not generally included; however, there is an exception for mutual funds. Any dividend declared by a mutual fund is reported in the year declared, regardless of the payment date.

Dividend payments received by a broker on short sale positions are reported as payments in lieu of dividends on Form 1099-MISC.

Your year-end Dividend Statement provides more detail on specific payments reported on 1099-DIV.

Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, reflects proceeds received from securities transactions including short-sales, redemptions, tender offers and a bond’s final principal distribution or maturity, other than redemptions and exchanges from money market and retirement accounts, for the year.

Box 2 reports gross proceeds, less commissions and fees, received from transactions involving sales and short sales of stocks and bonds, other debt obligations, commodities, forward contracts, mutual funds and other securities.

Also included in gross proceeds is cash paid in lieu of fractional shares, sometimes referred to as payments in lieu, received on a corporation’s sale of fractional shares resulting from a corporate action (ie, merger, spin/split-off or exchange). Refer to IRS Publication 550, Investment Income and Expenses, and consult your tax advisor for proper reporting of cash in lieu of fractional shares.

Box 4 is the amount of federal income tax withheld from the sale. IB does not report amounts for Box 8, 9 and 10. Box 11 is the aggregate profit or loss of lines 8, 9 and 10 on regulated futures contracts (and options on futures contracts) for the year. Refer to Form 6781 and Instructions for guidance on how to report this amount.

Single stock futures are not considered to be regulated futures contracts

and thus transactions involving these types of financial instruments are not reported.

Amounts are included from SELL trades from the exercise or assignment of stock options. Your BUY trades are not reflected in the 1099-B. Capital gain (loss) or profit and (loss) from securities is not reflected. IB customers are responsible for calculating their gains or losses. No equity option, futures option, Forex or single stock futures trade information is included on the 1099-B. Refer to IRS Publication 550, Investment Income and Expenses, for a further discussion and guidance in this area.

Proceeds from money market fund transactions and retirement account distributions are not reported on Form 1099-B.

Amounts from municipal bonds and US government obligations sales and maturities are also reported as are proceeds from an acquisition of control or a substantial change in capital structure are also included.

More sales proceeds detail for stocks and bonds as well as FIFO profit and loss estimates for stock, equity options, single stock futures, Forex and bonds may be found on your Supplemental Gain & Loss Report. MTM gain and loss details for futures as well as futures options may be found on your Annual Statement.

Form 1099-MISC, Miscellaneous Income, reports gross fee income paid to advisors and substitute payments in lieu of dividends received by IB.

Box 7 reports gross fee income paid to advisors and gross commission paid to introducing brokers.

Box 8 reports substitute payments or payments in lieu of dividends (tax-exempt interest) received by IB on your behalf, as a result of a loan of

your securities. Box 4 reports any US tax withheld. Refer to Publication 550, Investment Income and Expenses for reporting substitute payments and consult your tax advisor.

Details for fee income paid to advisors and brokers can be found on your Annual Activity Statement and details for payments in lieu of dividends or interest appear on your year-end Dividend Statement.

Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, reports distributions and payouts to you from your IB retirement accounts, during the year. Principal Trust Company, the administrative manager for IB’s retirement accounts, provides Form 1099-R directly to you. Also reported are Direct Rollovers from one retirement account to another and full or partial distributions.

Box 1 reports the total amount of distributions you received this year. Box 2a reports the amount of your distribution that may be subject to federal income tax. In the case of a direct rollover, the amount reported will be

zero. If the distribution is from a Roth IRA, Box 2a is generally left blank. Box 2b indicates the taxable amount is not determined if you made nondeductible contributions or if you received a distribution of all assets in the plan, thereby closing the account. Box 4 is the amount of federal income tax withheld from your distribution.

Box 7 identifies, by code, the type of distribution you received and if the distribution is from a Traditional, SEP or SIMPLE IRA. Some of the more common IRS codes are listed below:

Direct Rollovers

The IRS requires the trustee of an employer-sponsored retirement plan (401(k), 403(b), 457(b), or annuity) to report a direct rollover to a Traditional IRA as a distribution on Form 1099-R. Principal Trust Company, the administrative manager for IB’s retirement accounts, will be the successor trustee. In a direct rollover, distributions are generally not taxed.

Trustee-to-Trustee Transfers

A transfer of funds in your traditional IRA from one trustee directly to another, either at your request or at the trustee's request, is not considered a rollover. There is no distribution to you and the transfer is tax free. Because it is not a rollover, it is not affected by the 1-year waiting period required between rollovers. Trustee-to-trustee transfers are not required to be reported on Form 1099-R.

Form 5498 Click here for a sample Form 5498

While distributions are required to be reported on Form 1099-R, the IRS requires IRA contributions including direct rollovers to be reported on Form 5498, discussed below.

Nondeductible Contributions and Form 8606

IRA contributions are deductible up to certain limits. You must report any nondeductible IRA contributions or distributions of nondeductible IRA funds, on Form 8606 filed with your tax return. Please consult your tax advisor.

Form 5498, IRA Contribution Information, is a statement of your IRA contributions and rollovers (including direct rollovers) from employer-sponsored retirement plans to IRAs, including Traditional IRAs, Roth IRAs, Simplified Employee Pension (SEP) IRAs, to your retirement account during the reporting year. Form 5498 reports the value of these accounts as of December 31 of the prior year. This information is also reported to the IRS. Principal Trust Company is the trustee for retirement accounts held with IB and provides this Form to you.

Box 1 reports deductible and nondeductible contributions you made to a Traditional IRA in the reporting year and contributions completed between January 1 and April 15 of the current year and designated for the prior year. Box 2 shows any rollover, including direct rollovers to traditional or Roth IRAs in the taxable year. This amount is reported on your Form 1040.

Box 5 shows the fair market value (FMV) of all investments in your account by December 31 of the reporting year. Box 11 is checked if you are required to take a minimum distribution (RMD) in the current year. Please consult your tax advisor.

Direct Rollovers and Form 1099-R

If you completed a direct rollover, this information is reported on Form 1099-R, discussed earlier.

Trustee-to-Trustee Transfers

A transfer of funds in your traditional IRA from one trustee directly to another, either at your request or at the trustee's request, is not a rollover. Because there is no distribution to you, the transfer is tax free. Trustee-to-trustee transfers are not required to be reported on Form 5498.

You will receive Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, if at the fiscal year end, the Regulated Investment Company (RIC) or the Real Estate Investment Trust (REIT) in which you invested retains a portion of realized long-term capital gains and elects to pay income tax on your behalf on the net capital gain income it received. A separate Form 2439 is issued for each investment of this type reporting this income.

Box 1a reports your total undistributed long-term capital gain from the RIC or REIT. Box 1b is your allocable portion of the amount included in Box 1a that has been designated as unrecaptured section 1250 gain from the disposition of depreciable real property. Box 2 contains any federal income tax paid by the RIC or REIT on this gain in your behalf.

Form NR4, Statement of Amounts Paid or Credited to (Canadian) Non-Residents, reports gross income payments made to you if you are a Canadian non-resident and you own some types of Canadian securities.

Investment income including capital gains, mutual fund distributions, dividends and interest paid by a Canadian agent to Canadian non-residents

are reported in box 16 or box 26. All amounts are reported in Canadian Dollars. For US taxpayers, these amounts are also included on your 1099 forms including any Canadian withholding tax on dividends.

The Annual Statement shows trade detail for account gain and loss for stocks, options, bonds, single stock futures, futures and futures options on a First In, First Out (FIFO) matching basis or the specific method of tax accounting selected for your account.

The Gain/Loss Summary Worksheet shows trade detail for all securities (stocks, options, single stock futures and bonds). Transactions are split into two sections: Short-Term Capital Gains and Losses and Long-Term Capital Gains and Losses. All attempts have been made to tie total proceeds shown on this worksheet to your Form 1099-B total proceeds; however, discrepancies may exist. Proceeds are reported net of all commissions.

For 2008 and prior years, gains and losses are calculated using a First In, First Out (FIFO) methodology.

At this time, gain and loss detail for FOREX is not available and the customer is responsible for calculating and reporting this information.

• Sales proceeds from closing stock trades that are the result of an exercise and/or assignment include the proceeds of the option on the Gain/Loss Summary Worksheet, but Form 1099-B does not include option proceeds. To reconcile the Gain/Loss Summary Worksheet to Form 1099-B, we included adjustment lines at the end of the worksheet offering option proceeds/costs.
• Fractional share transactions are included on the Gain/Loss Summary Worksheet, and reported on Form 1099-B.

• At the present time, the Gain/Loss Summary Worksheet does not reflect whether your transactions are subject to the wash sales rules and wash sales are not reported on Form 1099-B. Refer to IRS Publication 550, Investment Income and Expenses and the Instructions for Form 1040, Schedule D for further information and consult your tax advisor for the proper reporting of wash sales.
• Cash-settled index securities futures are included on the Gain/Loss Summary Worksheet, but may be reported differently on your tax return. Refer to the Instructions to IRS Form 6781.

The Futures and Options Gain/Loss Summary Worksheet provides detail on mark-to-market profit and loss for sales of equity options, futures (excluding single stock futures) and future options in your account.

Futures contracts may be eligible for special gain or loss recognition treatment under Internal Revenue Code Section 1256. Generally, these

gains or losses are allocated 60% to long-term capital gains and 40% to short-term regardless of the holding period. Special rules also apply to foreign currency contracts subject to these US tax provisions.

• any regulated futures contract,
• any foreign currency contract,
• any non-equity option,

• any dealer equity option or
• any dealer securities futures contract