TD Ameritrade Sends Out Email Opposing US Senate Tax Bill

On the evening of November 27, 2017, TD Ameritrade / Scottrade sent out the following email to their clients opposing a provision within the Senate Tax Cuts and Jobs Act currently in the US Senate:

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Dear Valued Client,

TD Ameritrade believes it’s important to stand on the side of our clients. We have reviewed the Senate Tax Cuts and Jobs Act, which was released last week. Section 13533 of the Senate Bill imposes a single cost basis methodology for investors, “first in, first out” (“FIFO”), on all sales of securities (except mutual funds).

For the average investor, this means possibly being required to pay the highest capital gains taxes where a stock has appreciated over time.

On behalf of our approximately 11 million client accounts, we strongly oppose this provision. We believe it will harm individual investors by eliminating their freedom to decide when to take losses or gains on their investments, potentially resulting in an increased tax burden.

An Example

Suppose you hold a significant amount of a company’s stock, accumulated over a 20-year career. You’re now retired, and you want to sell some company stock to diversify your portfolio. Assume the purchases over time range from $5 per share up to $90 per share, but the stock now is trading at $50.

If you sell at $50, rather than being able to take losses on the stock purchased above $50, the Senate Bill could require you to pay capital gains taxes on the appreciation of the stock from $5 to $50. That is, even if you have experienced sizeable paper losses on the purchases above $50, the Senate Bill might force you to pay taxes calculated on the largest gains possible.

We don’t think that’s fair. We feel the Senate should stand up on behalf of individual investors and reject imposing a FIFO cost basis requirement on sales of securities.

What Can You Do?

If you are concerned about these changes, we encourage you to contact your congressional representatives today and make your voice heard. We have created a site so that individual investors like you can stay informed and easily reach out to your government representatives on issues that matter to you. You’ll find a summary of current issues there, along with template letters to help get you started.

TD Ameritrade believes in providing our clients with a voice on issues that stand to impact their ability to confidently save, invest, and plan for the future. We are on the frontlines, communicating your interests to those who can influence policy and bring about change.

By coming together, we can have a more meaningful impact. Please join the conversation.