Advisor Portal Tax Loss Harvesting Tool

Financial advisors can use IBKR’s Tax Loss Harvesting Tool through the Advisor Portal to help clients realize the tax benefits of harvesting capital losses. Advisors can preview the potential losses on stocks and ETFs and pre-allocate shares across multiple accounts to fully or partially close out positions and harvest the capital losses. Tax loss harvesting can be a useful part of an overall financial plan and help lower your clients’ overall tax burden, especially if they are in a higher tax bracket. 

Accessing the IBKR’s Tax Loss Harvesting Tool  

An advisor can access the IBKR Tax Loss Harvesting Tool in the Advisor Portal by navigating to the Menu in the upper left, expanding the Trade menu, and selecting Tax Loss Harvester. Read the disclaimer and when satisfied they click “Accept” to bring up the IBKR Tax Loss Harvesting Tool. 

Sections of the IBKR Tax Harvesting Tool

There are three sections of the IBKR Tax Harvesting Tool.

• Identify Positions at Loss
• Tax Loss Information Summary
• Filter Positions & Find Replacement

Identifying losing opportunities in the IBKR Tax Loss Harvesting Tool

At the top of the Tax Loss Harvesting Tool is the “Identify Positions at Loss” section. In this section, the Advisor can enter in criteria to either sell an entire position which is showing a loss by clicking on “Entire position” or just the specific lots of that position that are showing a loss by clicking “Lot”. Next the advisor chooses to search for long term losses, short term losses, or both by clicking the appropriate selection.

The advisor can also define the minimum loss as either a dollar amount or percentage, as well as choose to include nontaxable accounts in the search.

Viewing a summary of projected losses and tax loss harvesting opportunities in the IBKR Tax Loss Harvesting Tool

In the “Tax Loss Information Summary” section the advisor can view a summary of projected losses and tax harvesting opportunities by either long or short positions. The Summary area allows the advisor to see the overall projected losses across all the accounts they manage as well as a summary of the number of client accounts and unique securities where the losses are distributed across.

In the table below each account is listed with the number of securities showing a loss, the projected loss allowed, the projected loss disallowed, the cost, and the projected loss percentage.

Filtering the selection of tax loss harvesting opportunities in the IBKR Tax Loss Harvesting Tool

Advisors can narrow their selection of tax loss harvesting opportunities using the filters in the “Filter Positions & Find Replacement” section. They can filter by:

• Account/Group – which allows the advisor to filter by individual accounts or Groups
• Portfolio – although please note that IBKR does not track tax lots by portfolio segment. The projected P&L calculation uses all tax lots available in the account. While the positions sold within the specified portfolio segment may be sourced from various tax lots available in the account, the desired target position for the selected portfolio segment will be achieved.
• Individual security

The advisor can also select the percentage of the position they want to close. For long positions, the advisor can select Find Replacement to select the replacement method choosing from:

• Cash
• ETF – which the advisor can select from a list after clicking the blue ETF button next to the row, or
• Stock – which the advisor can select a security in the same sector, industry, and category as the position they are closing.

Creating and submitting tax loss harvesting orders in the IBKR Tax Loss Harvesting Tool

Once the Advisor has made the tax loss harvesting selections they can click on the “Create TLH Orders” button in the bottom right-hand side of the window. This will bring up the Orders & Trades page where the advisor can select Review & Submit to complete the order Order Ticket and submit the orders. All accounts involved with the order will receive the same average price.

Creating reports to verify tax allocation

The Advisor Portal also allows the advisor to create custom statements to verify the lot allocation.  Once the custom report has been created and saved it can be run on the next business day after trades are made to confirm the lot allocation. To create a custom activity statement, click the Menu icon in the upper left-hand corner, expand the Reporting area and select “Statements”. If prompted with the Account Selector, the advisor selects an account they wish to run a report for. The Advisor clicks the plus sign next to “Custom Statements” names the report, and selects Activity for Statement Type. In the default sections area, click Trades. In the Section Configurations area next to Profit and Loss, select MTM and Realized P/L in the drop-down box.

Ensure that the toggle next to “Hide Details for Positions, Trades, and Client Fees” section is set to NO. Next, set the delivery configuration including the period and when ready click Continue, and the advisor will be able to review their settings. Once reviewed click the Blue Create button in the bottom right-hand corner. A message will confirm the Custom Statement has been Saved. Now the advisor can run the report anytime for any or all their accounts.

The output will show the list of trades. The advisor can click the plus sign next to a trade to expand and they will see the Closed Lot details. Losses will be shown in red, and gains will be shown in green. On the far-right column under Code it will show either ST for Short-Term or LT for Long-Term.