I understand that, but you can be an individual trader and never "incorporate" (i.e., there was no definitive action that you took to become an entity), yet because of the frequency of your trading you qualify for "tax trader status." This entitles you to write off business expenses on Schedule C under your own personal name (as a sole proprietor). Is this purely a tax classification? Or does this affect the profession/non-professional classification as well? The individual trader is clearly an individual and is a natural person.
Professional or Non-Professional Subscriber for Exchange Data Fees
- Thread starter JSOP
- Start date
I understand that, but you can be an individual trader and never "incorporate" (i.e., there was no definitive action that you took to become an entity), yet because of the frequency of your trading you qualify for "tax trader status." This entitles you to write off business expenses on Schedule C under your own personal name (as a sole proprietor). Is this purely a tax classification? Or does this affect the profession/non-professional classification as well? The individual trader is clearly an individual and is a natural person.
Robert Morse
Sponsor
I would not have my client claim pro-status for that set up.
For me Morse is the best poster on ET. Always trying to help people and giving really good advice. Thanks Morse!
Long ago it was explained to me this way, "Schedule C (Form 1040), Profit or Loss From Business", if I use, am a Business and Profession as I am showing the U.S. government I am a business and wanting to write off expenses like higher data fees. If I don't file Schedule C and trade for myself, then I am non professional. Unless you renting an office, I can't see claiming expenses on Schedule C unless to flying around the country for education purposes, and to claim part of your house as an office, most likely you be sitting in front of agent before long, first year I did so triggered an audit.
What most people are really asking if they can get incorporated and get away with paying non prof fees, always can play dumb as not real clear on wording, but at what expense will it if they decide to take you to court, you lose you might never be able to trade in USA. Unless you making half mil a year, don't see point of LLC. Nothing is free.
What most people are really asking if they can get incorporated and get away with paying non prof fees, always can play dumb as not real clear on wording, but at what expense will it if they decide to take you to court, you lose you might never be able to trade in USA. Unless you making half mil a year, don't see point of LLC. Nothing is free.
I understand what you are saying, but there is this whole section of the tax code dealing with whether an individual qualifies for "trader tax" status. Whether you are a "trader" in the eyes of the IRS basically comes down to the quantity and frequency of your trading. One year, you could qualify as a "trader" (because of your trading frequency) and the next year you might not (maybe your trading frequency dropped). At no point did the individual "incorporate". However, the year that the individual qualified as a "trader", the individual is entitled to write off certain expenses as business expenses as per the IRS instructions. The only place where these expenses can be written off is on Schedule C. The individual is not a corporation and is not an entity. Does the individual pay for professional data fees in the one year he qualified for "trader tax" status? And then does the individual pay for the non-professional data fees the next year when he did not qualify? How does the individual know before the trading year is up whether they will qualify for "trader tax" status or not? I.e., what if they are right on the borderline of what qualifies as "trader tax" status? Which fee structure do they sign up for - professional or non-professional?
Right, I'm not going to endlessly repeat myself for people who can't be bothered to read.
One last time : A NATURAL PERSON IS JUST THAT.
Therefore if you are opening an account IN YOUR OWN PERSONAL NAME signing exchange-data IN YOUR OWN PERSONAL NAME then (as long as you are not otherwise involved in the financial sector) you are a "non-professional".
The minute you open account in a name other than your own name (business, corporation, trust, organization, institution, partnership,sole proprietorship... however you want to call it), then you are signing the paperwork as an authorised signatory of that other name (president, director or whatever you want to call yourself) ... then you are a "professional".
Sheesh... ITS NOT THAT DIFFICULT TO UNDERSTAND !!!!
I am not going to post any further on this thread. This is my last post.
Trader tax status is 720 trades per year, each trade 31 days or less. Anyone trading full time will easily achieve trader tax status. If you are not a full time trader IE your primary source of income is other than trading you should not be filing trader tax status even if you meet the metric.
When you put it this way, it does seem cut and dry.
However, when you read information on this subject, it is confusing. Some people on this thread are in disagreement with you. Not to mention that at one point in this thread you were saying an individual trader as a sole proprietor was a "professional", but now you are saying that trader is a "non-professional". I assume that the reason you switched positions is that I clarified some specifics of the situation.
The contents of this thread would have helped me immensely in the past so thanks for your input.
Yes but it is possible to be straddling that activity level the whole year. Then you would not know until year's end if you could be classified as "trader" in the eyes of the IRS.