Options Trading as Business

R

rd100

Hi,

I'm wondering if trading options as a business is good option for my situation-

- Part-time trader
- W2 income, max 401(k) contribution thru job
- In high-tax bracket and won't need trading gains as monthly income
- Trade options spreads lasting few weeks to monthly expiration dates
- Won't qualify for MTM if trading at individual account level
- Would like to be able to deduct business expenses (books, software, CPA, trading conferences cost and travel) maximum possible
- Would like to be able to take net gains/losses to personal tax return [gains minus losses minus business expenses]

Should I continue as individual or trade as sole prop, limited/general partnership, LLC or S-Corp?

Any help is much appreciated.

Thanks
rd
 
Do it as a sole propriator if you think you might have liabilities do it as a LLC and run it though your personal income.
If you have losses its a plus, helps your high tax bracket
If you have gains its a plus, you can deduct expenses running the office.
(I am not a tax expert)
For additional questions search for Robert Green, NY $400 bucks an hour, I have used him before.
 
Quote from rd100:
I'm wondering if trading options as a business is good option for my situation

Depends on whether you have an edge. Buying options for a length of time exposes you to time decay. Writing options exposes you to sudden large losses while limiting your upside. You either have an edge or you don't.

Should I continue as individual or trade as LLC or S-Corp?

Useless complexity for most traders.
 
Let's say I make 10K in options gains and have about 4K in expenses (magazine and online subscriptions, seminars cost and related travel expenses). Can I have net gains of 6K pass-thru to my personal tax return? How can I do that without MTM/trader tax status at individual or entity level? Does a husband/wife partnership work for this or a S-corp?

If I had 5K in options losses and 4K in expenses, given that I don't have MTM, what would pass-thru to my personal tax return? Is it -3K in total or is it -3k in capital losses and also 4K in expenses?

If you have an S-corp, can you just pay yourself reasonable salary once a year at the end of the year?

Thanks for your help
rd
 
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