Opening account with Interactive Brokers as S Corp

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newdog

Does anyone has experience regarding what kind of end of year tax forms IB issues if you open prop account using an S corp vs using LLC?
 
newdog said:
You pay medicare and social security on entire profit in LLC.
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I don't believe that is true. I have no clients that use a s-corp and almost all of them are LLCs (Some are LPs and individual accounts). If you are a single member LLC, you don't even need a K1, as single member LLCs are considered a disregarded entity and all your income filters down to your person taxes. It is what every accountant I have ever spoken to recommends with or without MTM.

https://www.irs.gov/taxtopics/tc429.html

Traders report their business expenses on Form 1040, Schedule C (PDF), Profit or Loss From Business. The Schedule A limitations on investment interest expense, which apply to investors, do not apply to interest paid or incurred in a trading business. Commissions and other costs of acquiring or disposing of securities are not deductible but must be used to figure gain or loss upon disposition of the securities. See Topic 703, Basis of Assets. Gains and losses from selling securities from being a trader are not subject to self-employment tax.
 
LLC can choose S corp filing. Just do a google search on LLC vs S corp and you will read about the tax advantage of S corp election. In S corp you only pay social security and medicare on your salary while in LLC it's the entire profit.
 
newdog said:
LLC can choose S corp filing. Just do a google search on LLC vs S corp and you will read about the tax advantage of S corp election. In S corp you only pay social security and medicare on your salary while in LLC it's the entire profit.
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It's your money, I'm just trying to help. I would choose an LLC if I were to start a trading business today based on my experience.
 
You are just spreading misinformation when you start using words like "I don't believe that is true". You have re-posted basically a misinformation.

I am not discounting your desire to help however.
 
my cpa informed me, LLC is not necessary for anyone not consistently earning over 50k profit annually from trading. The cost and complications exceed any tax savings. Plus it raises flags for audit. The benefits are for the people that sell LLC and corp setup, and cpa that charge extra for additional tax returns.
 
lylec305 said:
my cpa informed me, LLC is not necessary for anyone not consistently earning over 50k profit annually from trading. The cost and complications exceed any tax savings. Plus it raises flags for audit. The benefits are for the people that sell LLC and corp setup, and cpa that charge extra for additional tax returns.
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An entity is not necessary for anyone, period. In fact the US IRS would appreciate it. However, if you are profitable, and would like to take advantage of company benefits, such as healthcare, retirement, and other goodies, including the ability engineer personal income tax, you MUST trade through an entity.

Now back to the OPs question about eoy tax forms sent by IB. I've not used IB, so I can't answer. However, it will be the responsibility of the S-Corp to reconcile those documents for completing the S-Corp tax return, and to prepare and distribute K1's to the S-Corp shareholders.
 
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