Can IRS force Trader Status?

[Robert Morse]

Ah? What about deductibility of business related expenses?

I'm not an expert on this, but that is what I would use the LLC for. I was focusing on the question above.

No, the IRS does not make anyone choose MTM that is a "Customer" for securities trading.
MTM accounting is what is used for Futures and no election is necessary.

I'm required to follow that with, consult your tax specialist for confirmation on these matters.

You should all watch this: 7 Ways to Save on 2016 Tax Returns for Traders: Robert A. Green is the expert:

 

[Zzzz1]

Hmm, deductivibility of business related expenses is a big aspect of the TTS. So, ignoring that entirely and saying when trading futures one does not need to consider TTS is missing a big chunk of the equation, no?

I'm not an expert on this, but that is what I would use the LLC for. I was focusing on the question above.

No, the IRS does not make anyone choose MTM that is a "Customer" for securities trading.
MTM accounting is what is used for Futures and no election is necessary.

I'm required to follow that with, consult your tax specialist for confirmation on these matters.

You should all watch this: 7 Ways to Save on 2016 Tax Returns for Traders: Robert A. Green is the expert:

 

[java]

tax on what?
I doubt I will even be even Dec31.

 

[joezapp]

I am considering TTS as well, since I can't see how I wouldn't qualify. I trade full-time, open to close, and do thousands of trades per year. It's all I do for income.

When I researched it last, the biggest advantage I saw was for those like myself who live in a state that will tax capital gains, but will not recognize a capital loss. No credit for it and no carryover. Going TTS makes a capital loss on the year count. So if you live in such a state, and you have a capital loss year, you should benefit from TTS.

Additionally, I believe dividends are treated differently when you use TTS. I forget how so.

Hope this helps.

 

[Zzzz1]

I guess what you mean is that a year of losses cannot be carried over? I cannot imagine there is a state nor the federal government that ignores losses during a year and only tallies up gains and then imposes a capital gains tax on that. Generally gains and losses are netted and if there is a net gain then you will be assessed taxes on that.

I am considering TTS as well, since I can't see how I wouldn't qualify. I trade full-time, open to close, and do thousands of trades per year. It's all I do for income.

When I researched it last, the biggest advantage I saw was for those like myself who live in a state that will tax capital gains, but will not recognize a capital loss. No credit for it and no carryover. Going TTS makes a capital loss on the year count. So if you live in such a state, and you have a capital loss year, you should benefit from TTS.

Additionally, I believe dividends are treated differently when you use TTS. I forget how so.

Hope this helps.

 

[joezapp]

I guess what you mean is that a year of losses cannot be carried over? I cannot imagine there is a state nor the federal government that ignores losses during a year and only tallies up gains and then imposes a capital gains tax on that. Generally gains and losses are netted and if there is a net gain then you will be assessed taxes on that.

You got it, Zzzz1. If you have net losses for the year, in some states, like mine, no matter how large the loss, you put "0" on the "capital gains" line with no carryover. A net loss for the year gets you no benefit / no relief. That changes with TTS, and becomes a huge benefit for those with a large loss on the year in such a state.

 

[fordewind]

tax on what?
I doubt I will even be even Dec31.

lol....

 

[Sig]

I am considering TTS as well, since I can't see how I wouldn't qualify. I trade full-time, open to close, and do thousands of trades per year. It's all I do for income.

When I researched it last, the biggest advantage I saw was for those like myself who live in a state that will tax capital gains, but will not recognize a capital loss. No credit for it and no carryover. Going TTS makes a capital loss on the year count. So if you live in such a state, and you have a capital loss year, you should benefit from TTS.

Additionally, I believe dividends are treated differently when you use TTS. I forget how so.

Hope this helps.

Just out of curiosity, what state?

 

[joezapp]

Just out of curiosity, what state?

New Jersey. There probably aren't many that do it that way, but there are some, and New Jersey is one of them. It really stinks to have a large net capital loss for the year in New Jersey!

 

[Zzzz1]

...contrary to a large net capital loss being enjoyable in other states? ;-)

But half serious, I look at taxes as a byproduct of life choices, not even as a cost of doing business. After all you (like anybody else) can attempt to secure a visa for Hong Kong or Singapore and trade mostly tax-free. You, however, chose to reside in NJ or wherever you live for a reason that is highly related to your personal life choices, at least I would assume so?

New Jersey. There probably aren't many that do it that way, but there are some, and New Jersey is one of them. It really stinks to have a large net capital loss for the year in New Jersey!