Recent content by Adam E. Spence CPA

https://greentradertax.com/uncertainty-about-using-qbi-tax-treatment-for-traders/ As an update to this discussion, please see above link for an article by Green Trader tax. My thoughts - absent a private letter ruling or something concrete from the IRS or Congress, each taxpayer will need to...

Thanks - tax reform is going to make things "interesting"; especially the business interest expense deduction limitation though I suspect it may not apply to the retail traders on this site.

Trading on your own account is not effectively connected with a US trade or business under IRC Section 864. Therefore, under Section 199A(c)(3)(A)(i), trading income would not qualify as QBI. The dis-allowance is right there in the code section and cannot be avoided by parsing words from...

Thanks - I am familiar with the article and the Section 199A regulations. Section 199A specifically precludes SSTBs, of which trading is one, and indicates that if the income is not effectively connected with a United States trade or business (the 864 exception) then it is not QBI. The issue is...

The mark-to-market income is probably not QBI - trading is generally not considered effectively connected with a trade or business conducted within the United States which is a requirement under Section 199A.

You can designate a security as being held for investment i.e. not for trading but it is done so when you purchase the security so the 475 election (or trader election if you prefer to think of it that way) is consistent. The "non 475 account" is the highest form of documenting that sort of...

Adding "Non-475" to the account name would help document the fact pattern that its a separate from trading activities though the IRS could always challenge the position.

A new taxpayer must place a statement in their books and records within the first 2.5 months of the first taxable year indicating the 475 election is being made, the effect year, and to what business it will apply. This election will get attached to your first tax return. The election is...

Per the Form 2016 instructions: Commuting. Generally, commuting is travel between your home and a work location. However, travel that meets any of the following conditions is not commuting. You have at least one regular work location away from your home and the travel is to a temporary work...

Capital losses, 3K of which can offset non-capital income (e.g. interest, wages, etc) in year one are carried forward. E.g. 100K capital loss in year 1; 3K loss limitation = 97K loss carryforward. The loss carryforward will eat through gains; any excess gain over the carryforward is taxable...

Hi Robert, I think we may be essentially saying the same things. I've started a private feed so we can make sure there's consistency in advice as to not confuse an already complicated topic. Any election made at a disregarded entity such as a single-member LLC is considered to be an individual...

Hi Robert, You are correct - it applies to the trade or business of trading, not all accounts. Specifically, 475(f)(3) indicates that the (f)(1) or (f)(2) election "may be made for each trade or business". It is possibly to have such a carve-out though there is no clear statutory authority for...

Generally speaking, the 475 election can be written in such a fashion that only the trade or business of trading is marked-to-market. The key is in the wording of election statement.

Only a 475 election or some other mark-to-market regime (1092, 1256) eliminates the hassle of wash sales. If you are a class b member of the firm you generally will receive a schedule k-1 for your share of the firm's taxable income or loss. Absent some mark-to-market regime, the firm may still...

It is less common that a 475 election is made at the individual level. It is usually seen within an LLC. That way, if the 475 election no longer makes sense, simply dissolve the LLC as the 475 election is difficult and expensive to revoke. Normally, within the context of an individual, the...