Help! Question About Home Office For Securities Trading LLC

V

vinky5

My taxes have been getting more and more complicated so I trialed a new CPA that advertises that he specializes in Trading Taxes. He is telling me that I can not actualize any of my Home Office Deduction. For 2021, with my single member LLC, I had a net business income from Securities Trading of around 40k from stock and options trading which he put on Schedule D and not on Schedule C. I had business expenses of 9k and home office expenses including carry overs since 2017 of 8k. He deducted the 9k business expenses from my income but is carrying over the Home Office Expenses to 2022. He says that Securities Traders under single member LLCs never actualize their Home Office Deductions every year and they just keep carrying them over although I had a net profit of 40k minus 9k expenses. Is this correct? I spent several hours trying to research it and a lot of things that popped up were from CPA website articles and they all seem to vaguely indicate that Home Office Expense can indeed be realized each year with securities trading through an LLC.

Does anyone know about this that can help me? The extension deadline is fast approaching and I don't know what resource I can use or ask to get the answer.
 
vinky5 said:
My taxes have been getting more and more complicated so I trialed a new CPA that advertises that he specializes in Trading Taxes. He is telling me that I can not actualize any of my Home Office Deduction. For 2021, with my single member LLC, I had a net business income from Securities Trading of around 40k from stock and options trading which he put on Schedule D and not on Schedule C. I had business expenses of 9k and home office expenses including carry overs since 2017 of 8k. He deducted the 9k business expenses from my income but is carrying over the Home Office Expenses to 2022. He says that Securities Traders under single member LLCs never actualize their Home Office Deductions every year and they just keep carrying them over although I had a net profit of 40k minus 9k expenses. Is this correct? I spent several hours trying to research it and a lot of things that popped up were from CPA website articles and they all seem to vaguely indicate that Home Office Expense can indeed be realized each year with securities trading through an LLC.

Does anyone know about this that can help me? The extension deadline is fast approaching and I don't know what resource I can use or ask to get the answer.
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When in doubt, get a 2nd opinion from a qualified CPA. Like any profession, you will have the best and worst at any given time. Maybe, a CPA seeking new business might give you a free 30 minute consultation to ask questions? If not, spending a couple of hundred dollars probably, is worth it. That is to get that 2nd opinion. The US tax code is riddled with grey areas which the IRS might disallow some of your deductions especially, if you are classified as a stock trader. Do not be cheap and refuse to spend on something this important which can affect you adversely, if you get the wrong advise. You will easily lose that amount the CPA charges you even for a consultation in a losing trade. So, the cost of that 2nd opinion is not even worth quibbling over. Get it right the first time, then, you will have less headaches to deal with in the future.
 
smallfil said:
When in doubt, get a 2nd opinion from a qualified CPA. Like any profession, you will have the best and worst at any given time. Maybe, a CPA seeking new business might give you a free 30 minute consultation to ask questions? If not, spending a couple of hundred dollars probably, is worth it. That is to get that 2nd opinion. The US tax code is riddled with grey areas which the IRS might disallow some of your deductions especially, if you are classified as a stock trader. Do not be cheap and refuse to spend on something this important which can affect you adversely, if you get the wrong advise. You will easily lose that amount the CPA charges you even for a consultation in a losing trade. So, the cost of that 2nd opinion is not even worth quibbling over. Get it right the first time, then, you will have less headaches to deal with in the future.
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Thanks for the advice. Problem is it took me basically since November 2021 to research good CPAs and find this guy. Now the deadline is Monday to submit. I’ll try to find another good CPA for a 2nd opinion but for now should I just have it submitted the way he is saying is correct? I asked twice, same response both times. Does anyone else know or feel strongly about it one way or the other?

On a different note, does anyone have reccs of really good CPAs that are good with traders? I heard someone named GreenTraderTax in the East Coast (https://greentradertax.com/)is good but charges 3X.
 
vinky5 said:
Thanks for the advice. Problem is it took me basically since November 2021 to research good CPAs and find this guy. Now the deadline is Monday to submit. I’ll try to find another good CPA for a 2nd opinion but for now should I just have it submitted the way he is saying is correct? I asked twice, same response both times. Does anyone else know or feel strongly about it one way or the other?

On a different note, does anyone have reccs of really good CPAs that are good with traders? I heard someone named GreenTraderTax in the East Coast (https://greentradertax.com/)is good but charges 3X.
More...

Unless you have gone through the process of obtaining trader tax status, the IRS will not view your trading as any different than the activities of a regular investor, for which they do not support home office deductions.

So you should ask yourself if the small deduction you want to take is worth the risk of increased scrutiny from the IRS now, and into the future.
 
lindq said:
Unless you have gone through the process of obtaining trader tax status, the IRS will not view your trading as any different than the activities of a regular investor, for which they do not support home office deductions.

So you should ask yourself if the small deduction you want to take is worth the risk of increased scrutiny from the IRS now, and into the future.
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I am claiming Trader Tax Status since December 2021; he already knows that as he is taking my business expenses (other than the Home Office).
 
Proptrader23 said:
My accountants have no problem deducting UPEs and home office expenses from my K-1. Might be time for you to go prop
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I’m a single member LLC so no K1 for me. Sounds like you do it through an Scorp? May be a move to make for me in the future. But for these Taxes, I did it under a single member LLC.
 
vinky5 said:
I’m a single member LLC so no K1 for me. Sounds like you do it through an Scorp? May be a move to make for me in the future. But for these Taxes, I did it under a single member LLC.
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your single-member LLC can be a class b member of a prop firm and your LLC would receive a K-1.
 
vinky5 said:
Thanks for the advice. Problem is it took me basically since November 2021 to research good CPAs and find this guy. Now the deadline is Monday to submit. I’ll try to find another good CPA for a 2nd opinion but for now should I just have it submitted the way he is saying is correct? I asked twice, same response both times. Does anyone else know or feel strongly about it one way or the other?

On a different note, does anyone have reccs of really good CPAs that are good with traders? I heard someone named GreenTraderTax in the East Coast (https://greentradertax.com/)is good but charges 3X.
More...

You can probably, file an extension to file your tax return.
 
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