Filing tax return as Trader Status and Mark to Market Election

Quote from Bob111:

form LLC cost about 125$ if you prepare and file yourself. that's in PA. fees may vary from state to state,but they certainly lower than 1K. amount of paper work...fill about 1 page with name of corporation and members. i would spit in the face of this fucker,who ask 1K for this kind of job. same for tax preparation. one CPA slap me with $700 bill for very simple return for 1065 and 3 K1's..fucked up everything. SS numbers,post profits as ordinary income etc..when we talking about his charges he said-his rate is 100$ in hour.. mean that this dummy spend 1 day preparing my corp taxes,where every single number is prepared and provided by me.the another CPA did same job for $50 right on front of me in about 15 min max.

there is some advantages in M2M election(which i didn't file yet). primarily in wash sales(another 5K in taxes for me for 2009)..so..5K here..5K there....dunno about you,but that's money for me..
but it's still not clear to me how you revoke this election. probably the best you can do is file some forms to IRS and then dissolve the company...but if you elect yourself as an individual-have no idea..i've heard and you have to write a letter(and receive approval) to IRS commissioner. kinda doubt that he will respond to any letter.
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How do you find the information of what you can write off? I've spoke with my current CPA and they are unfamiliar of which write offs pertain to the trader tax.. That is why I'm debating to payup to this cpa b/c he's known for it, but a bit expensive..

By the way this cpa charges 150 per half hour.. Apologize for the many questions....
 
How do you find the information of what you can write off? I've spoke with my current CPA and they are unfamiliar of which write offs pertain to the trader tax.. That is why I'm debating to payup to this cpa b/c he's known for it, but a bit expensive..

By the way this cpa charges 150 per half hour.. Apologize for the many questions....
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that's why i'm having a problems with those CPA's..they don't know shit..yet demanding ridiculous amount of money for their services.
imo-the only way to solve this-is educate yourself as much as possible, to properly record everything and do as much as possible yourself.

http://www.traderstatus.com/whyanentity.htm
 
Quote from Bob111:

that's why i'm having a problems with those CPA's..they don't know shit..yet demanding ridiculous amount of money for their services.
imo-the only way to solve this-is educate yourself as much as possible, to properly record everything and do as much as possible yourself.

http://www.traderstatus.com/whyanentity.htm
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Once you are set up, use Turbo Tax or similar software, as long as you don't write off too much of the wrong deductions you are fine. You can always "Consult" with a CPA for $100, and file yourself. The key is finding the right CPA, most are clueless, agreed.
 
This thread has been a great help, thank you for all of CPAs that contributed to this discussion.

Question:
1. I start day trading futures in Aug '10 and would like to post my expenses & profit in Schedule C & D, not electing MTM or creating an entity.
Would the active trader rule of min 1000 round turns still apply if the day trading activity only occurs in 5 out of 12 months in that year?

2. Is there any reference on what would qualify as valid expenses for active trader status? I've spent about $6000 in education, seminars this year and would like to list them in Schedule C. Is there a max $ that might post a red flag?

Thanks in advance.
 
Quote from moezik:

Would the active trader rule of min 1000 round turns still apply if the day trading activity only occurs in 5 out of 12 months in that year?
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there is no such rule.
 
to those that reach trader status year to year...

since they question how many trades a day you make in order to qaulify ..

as an example, does it matter if i buy and sell a 100 lot once a day or
putting in 20 orders of 5 lots to reach what the ideal amount of trading should be done?
 
Quote from ak15:

The other major advantage of claiming MTM is that you can carry forward or back your net operating loss for losing years and offset them against net operating gains in future years. As an example if you had a NOL of $50,000 in 2008 and a net operating gain of $40,000 in 2009, you will offset the $40,000 NOG against the $50,000 NOL and not pay any taxes in 2009. Furthermore, you get to carry over the excess of $10,000 NOL to 2010 and assuming you have a NOG in 2010, can offset this gain against the $10,000 remaining NOL excess.
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In this case, Can I write off only $10,000 loss against $40,000 gain in 2009, and carry over $40,000 loss to offset in the future years?
I know this is a basic business tax accounting question, but I have never done this before as I was always a regular employee. I'll appreciate the help. I live in a small town and I can't get a local CPA to answer this question.(The CPA is not familiar with day trading stuff)
 
No, you can't. You'll have to offset the entire 50,000 NOL for 2008 against the NOG of 40,000 in 2009 and can only carry forward the excess of $10,000 to the next year. You can't offset the NOL piecemeal as you suggested for the simple reason that neither you nor the IRS know in advance what your NOLs and NOGs are going to be for future years.
 
Without electing trader status, a person can still deduct his losses without the $3k limit versus future trading gains (as the $3k only applies to personal income).

Does this mean versus ANY future trading gains? Or only versus future trading gains on the same security where the loss occurred?
 
Quote from Option Trader:

Without electing trader status, a person can still deduct his losses without the $3k limit versus future trading gains (as the $3k only applies to personal income).

Does this mean versus ANY future trading gains? Or only versus future trading gains on the same security where the loss occurred?
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any
 
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