Free Portfolio Tracker Eases Tax Burden
By Cindy Christ

A free service to be launched next month promises to end record-keeping nightmares for active and long-term traders.

Starting Jan. 1, GainsKeeper.com, an Internet-based company developing portfolio management tools and services, is offering individual investors a year's free trial of its GainsTracker program, which calculates the tax effect of wash sales, splits, spin-offs and mergers.

The program also tracks holdings after they've been sold and calculates capital gains or losses. According to the company, the reporting feature helps investors complete their estimated tax payments and Schedule D of their federal tax return.

Right now, the program only supports stock trades, but a system for tracking option transactions should be online by mid-2000.

For investors who've held stocks many years, the tracker won't provide extended historical updating. And because it's PC -based, Mac users are out of luck, although the company says it plans to introduce a compatible version.

"GainsKeeper offers individual investors institutional quality portfolio accounting services that currently only high net worth investors are privy to," said GainsKeeper CEO Duncan Routh, in a statement.

After entering the sale of a security, the program automatically calculates the tax liability. The company says GainsTracker can help investors make better decisions and improve tax planning by providing them with real-time tax details on trades and updated portfolio values.

A team of internal securities and taxation specialists supports the service, the company said.

"There are more than 25 million portfolios being monitored over the Internet using existing portfolio trackers," said GainsKeeper president Chad Cook.

Cook says that unlike other portfolio trackers, which require investors to manually input corporate changes and figure holding periods, GainsTracker does it automatically.

"Today's portfolio trackers and software cannot make the complicated tax basis adjustments investors need. GainsTracker is designed to relieve investors of arcane accounting tasks, saving them time, expensive accounting bills and potential capital gains mistakes," he added.

Tax reporting for long-term investors -- who must record stock splits and adjust their cost basis to figure gains or losses grows tougher over time. Most investors wait until they sell securities to calculate the impact. By then, multiple splits and mergers make it hard to figure the tax effect.

For active traders, the tracker also monitors "wash sales," which occur when investors sell shares for a loss and buy them back within 30 days. IRS rules prohibit capital gains losses under wash sales.

Investors with more than one brokerage account also can monitor all of their trades and portfolio activity at one site.

To use the program, investors must enter stock purchases and sales from brokerage statements or trade confirmations. Afterward, the tracker will automatically update the portfolio value based on business changes like splits or mergers, and calculate the tax effect when securities are sold.

After the program launch in January, investors can generate tax information and corporate changes for their 1999 tax filing, the company said.

To ensure confidentiality, accounts are accessed by passwords, and the company says it will not "sell or otherwise distribute information about its individual subscribers."

Investors can expect the service to be up and running this January 2000.