Tax on trading income

[sprstpd]

Quote from Mr Guest:

Any CPA's out there know why Green transfers money to the schedule C to "zero" it out? Is it necessary? The IRS website doesn't say to do it that way. A trader-tax savy CPA I spoke to a while back said it was it is not needed. It seems that Green is the only one advocating this method. Who is right? Thanks.

Here is one reason - a business that has a negative income on Schedule C will supposedly more likely be audited. Furthermore, ireporting negative income on Schedule C year after year may make the IRS question that your enterprise is a legitimate entity for the purpose of making a profit. The only way they will know that your business is making a profit is to look at your return more closely. Why give them the excuse to start picking at your return?

 

[jumper]

i probably should start a new thread but i'll ask here first.

since the dividend rate is capped at 15%, would it save you money if you made 500k during the year and bought a stock, say CVC with $10 cash dividend, and save yourself about 20%?

before anyone asks, yes, i'm assuming the stock will go down $10 the day after the dividend is recorded. this would result in a $10 per share loss to offset your short term capital gains.