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mss is correct (assuming no M2M election was made), and further, since only expenses are reported on the Schedule C, there's likely no earned income to allow the taxpayer to make a SEP contribution for the year or deduct health insurance above the line. To get around that little problem, a...

(A) Generally the trading income or loss is allocated between the two states. If your residency actually changes (because you slept in CA 183+ nights) then you are a part-year CA resident and you follow those rules. If your residency stays in TX, then you might be a CA non-resident. In either...

Far from standard stuff :D Based on your question (which is not at all the tax efficient way to do things, but with the information given here is all we have to go with)... then: a) Pay 23% blended rate of tax on his share of profit ($20K profit), and take a writeoff on his share of...

As long as you have all that flexibility with the agreement then the answer is "it depends on what you want it to be" Nothing is written in stone here. All the items you mentioned are certainly feasible depending on your circumstances and depending on what your goals are. The first question...

Any of the above COULD be your situation... or other more tax-favorable choices COULD be your situation. A Limited Partnership, by definition, has an offering memorandum which as the starting point states the potential tax ramifications of how the partnership is organized and how the GP is...

Top notch firm there... thanks for the link!

Possibly. Retroactively filing with Trader Status does not change capital gains and losses one bit. But electing M2M does do so. The first posting asked about Trader Status, whereas in a following post the M2M method of accounting was mentioned. Confusing perhaps. There's always...

Absolutely not! Someone who has Trader Status oftentimes should not elect M2M if he has a sizable capital loss carryforward.

You have two questions. Yes you CAN retroactively file with trader status, but before doing so discuss that with your own tax advisor, particularly if it means filing an amended tax return. Totally unrealted to that is the question about the capital losses. As to that, as answered above, I...

Actually they seldom, if ever, pay. What's the chance that 2+2=17 happening? :) Most errors are user input errors or user interpretation errors. When and if a penalty IS assessed for an error.. The taxpayer must pay the tax and the software company "would be liable" for the penalty...

Actually it asks your occupation, not your title. Your occupation might probably be the same as listed on your Schedule C. If you do not use a Schedile C, then your occupation mgiht be that of "Investor"

I provided the link to the IRS website where you would could have learned that you are incorrect regarding the earnings retained in Ireland. "deemed dividends" are taxable here in the USA. Of course, as you say if one wants to MOVE AWAY from the USA, that's another matter entirely.

12.5% is sure attractive... for an Irishman national. But if you are a citizen of the USA then the income is taxed to you here in the USA as well as a person who has controlling authority over the foreign entity. http://www.irs.gov/businesses/small/international/article/0,,id=154943,00.html

Don, you never heard of a straw man trader? You don't think there's any in your LLC? Think again. Stick to running a great prop trading firm and leave the taxes and legalese to others. :) .

The taxpayer must meet the requirements of trader status as step #1. That's active trading (not buy & hold), as described in the previous link. A key factor in using a separately filing 100% pure play trading entity is that by definition the entity has no other source of revenues and has no...

there are disadvantages to trading through a c-corp. general rule - do not do it. You can sometimes justify using a c-corp if you want to, in ADDITION to the trader vehicle. yes there can be tax advantage for using an LLC, or other entity per se. For some people it's of great significance...

You want your cake and eat it too? Well this is allowed with a little care in handling your books and records and in making the M2M election - which assuming you are an individual filing form 1040, you can not do for 2006 because the deadline has passed... BUT a caution: While the IRS...

of course...

Stock trading does not go on Schedule C. Nor does Futures trading. Anyone who told you differently is either a charleton with some other motive in mind, or someone who has no clue. If you did M2M for securities, you should be using form 4797 for the trading. Your expenses of course go on...

Expenses on Schedule C has absolutely no bearing on whether you use Schedule D or Form 4797. Traders with Trader Status use Schedule C Investors use Schedule A With a few minor details, it is as straight forward as that.