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Many cryptocurrency investors are inappropriately deferring capital gains taxes when they exchange one cryptocurrency for another. An example of this practice: exchanging Bitcoin for Ethereum through a cryptocurrency exchange and using IRC Section 1031 “like-kind” exchanges. But if you were to...

Even if you aren't eligible for trader tax status, there are two bullet points in the petition that help investors. • Section 1256 MTM: Futures and other Section 1256 contracts are subject to MTM reporting with lower 60/40 tax rates. Section 1256 does not require TTS or an election; all...

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We need more signatures, otherwise, traders may come up short in tax reform. I can't deliver the petition to the Big Six tax writers until we get more signatures. It just takes a few minutes of your time. Big Six Tax Writers: Traders Need Fair Tax Reform...

Calling all traders! Tax reform is on the horizon, and we need to make sure our lawmakers are aware of our unique tax needs. Traders stand to lose many existing tax breaks and exclusion from a lower tax rate on business income. We lack trade associations or industry groups that advocate for...

If you report a capital gain from a constructive sale on an appreciated financial position for a short sale against the box, your Form 8949 will not reconcile with the broker 1099-B. So be it: There are many other reasons it won't reconcile like wash sale losses on substantially identical...

Traders are on their own when it comes to tax compliance for short sales. Brokers don’t report constructive sales on appreciated financial positions on 1099-Bs, and many miscategorize stock borrowing fees as interest expenses. Forbes blog posts: IRS Short Selling Rules Can Be A Taxing Matter...

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Traders have unique tax issues on state and local income tax returns for business entities and individuals. Moreover, state and local tax regimes vary significantly. The preferred business entity for a trader is an S-Corp pass-through entity, which is free of entity-level federal taxation. Some...

I just published a blog post on our Website GreenTraderTax: Tax Treatment For Volatility Financial Products. Take a look and post comments and questions, thanks.

By Robert A. Green, CPA Proprietary traders are significantly different from retail traders. Proprietary traders don’t trade their capital. They trade the firm’s capital, usually accessed from a sub-trading account. A prop trader becomes associated with a prop-trading firm either as an...

http://greentradertax.com/trader-tax-center/international-tax-matters/ Foreign partners in a U.S. trading partnership can be tax free If the non-resident is a member of a U.S.-based “pass through” taxable entity — such as a hedge fund or proprietary trading firm — that person is still exempt...

New blog post: Traders: Good and Troubling News in Poppe Ruling Excerpts on prop trading: (Is anyone on Elite having problems with the IRS over these issues?) The Poppe court construed Poppe’s proprietary trading firm arrangement to be a disguised retail customer account. This ruling should...

RIP Don. I have fond memories of Don since around 1999. As the online trading industry changed, I often spoke with Don about change in prop trading firms, related regulations and tax compliance. Don was passionate about our industry and an advocate for traders. He made a difference and will be...

I don't recommend a C-Corp for a trading business. There is double taxation on income, no pass through of losses to your individual return, no lower 60/40 tax rates for Section 1256 contracts and other problems. You can't deduct investment expenses if all you do is invest with a C-Corp. For...

High-income traders qualifying for trader tax status (TTS) should consider a defined-benefit plan where they can contribute up to $210,000 per year. You need an entity to create officer's compensation and we recommend either a trading company (qualified for TTS) taxed as an S-Corp. Or, a trading...

Carried interest is a Schedule K-1 profit allocation in an investment or trading partnership tax return earned by the investment manager in lieu of incentive or performance fees. Incentive fees are revenues to the management company, taxed as ordinary income and subject to FICA/Medicare (payroll...

Hillary Clinton's capital gains tax proposal raises tax compliance complexity. It's going in the opposite direction from simplicity and reform. Brokers are still struggling with cost basis regulations calling for beefed up 1099B tax reporting. Clinton's proposal of sliding scale long-term...

Lot's of tax breaks on trading Section 1256 contracts. http://greentradertax.com/trader-tax-center/tax-treatment/section-1256-contracts/ Lower 60/40 tax rates at all tax brackets. On the 10% and 15% ordinary rate brackets the LT capital gains rate is zero. Don't forget the Section 1256 loss...

Some taxpayers make a tragic mistake in not reporting capital losses on tax returns. Years later when they have a capital gain to report they want to offset it with the capital loss carryover but the IRS does not allow them to do so since they don't have a capital loss carryover reported on the...