It seems to me if you make a lot of money...like if you are in the over 100k in a year area...you may get on the audit list...but don't most daytraders lose money?
Tax problem with daytrading futures in Roth IRA?
- Thread starter OrderBlaster
- Start date
i am not interested in speculation found on the internet. until i see a case where an ira has been disallowed for excessive trading i dont think its true.
i didnt see anything related on that link you posted.
That link was for you to hire a knowledgeable attorney and get the letter of intention if you so desire.
I'm not suggesting you get any valid info off the internet either. If we're talking chump change why continue this? If a lot of money and possibly a lot of tax liability is involved hire a good 80 lawyer or in this case 2200 lawyer law firm.
I unnecessarily worked 5 years because I thought it would pay off in spades down the road only to learn I was deluding myself. Thank goodness most of my profits were in infrequent long term positions and my index trading was mostly "outside" the Roth in previously existing accounts.
So it's simple, if you are a big swinging dick, trading every day in a Roth and making big bucks... take heed. End of discussion.
In my case I added additional contracts to bring me back to my "net" position and when I think about it these days I reach for the bottle. Just kidding.
YES and YES and anywhere they want to. The rules are deliberately vague.
If what I think you're telling me is so, you too better look into it as well. The Roth IS bogus. It is an illusion if you "make it" in trading. Few do, so no one considers the alternatives.
If your trades were years long like my gold and crude oil and other stuff it is NO problem. You might get audited but you haven't done anything but what you're supposed to do- invest for your retirement. BUT... if you think you can avoid paying taxes and run a business tax free by doing it in a Roth- think again.
Sorry, no one is more unhappy than I. I had big plans and the guns to pull it off as well. I was searching the world over where I might live in a tax free haven if I chose to leave the USA. in the future. Now it doesn't matter.
this part i believe. lol
I wonder how long ago was the examination? As disclosed in an exclusive interview in Ed Slott's IRA Advisor newsletter a couple months ago http://www.irahelp.com/ the IRS is preparing to come down hard on non-compliant plans. IMO, the only thing holding it back right now is negotiations as to if the onslaught will be an inquisition at the hellfire and brimstone level, or if the advising CPA's and other outside parties are sucessful in getting it toned down to the hell hath no fury level
In scanning all 11 pages of this thread, I wanted to at least indicate the following, based on Trader Status. First, I have identified trader status with specific accts, not my IRA's/Roth accts. Secondly, I do trade under "trader status"futures, although the tax incentives are better under another umbrella, the future trading offers me a greater leverage for my limited resources and much better potential to make $$$ for my particular trading style.
In reference to the day trading and the questionable "frequent day trading" allowable by the IRS, surmised by other individuals in this thread, I know the following is applicable.
IRA Roth transactions
1. The holding period has no meaning - there is no distinction between long or short term capital gains
2. the sources of income or gain are treated the same - dividends, interest, capital apprectiation - again no distinction within an IRA/Roth
3. Internal transactions are not report to the IRS, there are just not any tax issues on buy or sell transactions within an IRA/Roth.
4. The IRS has no interest in record keeping, the only record keeping should be for yourself, marking your progress, etc..
5. There is no TAX Losses, the losses aren't a workable solution to your winnings.
6. Frequency of trades - the IRS does not care.... the IRS does care if you have "trader status", but in reference to Roth IRA, and trading Options, Forex, Futures, or Equities, there is no mention anywhere.
I trade with IB options, futures and equities, and due to the low commissions rate, the need to swing trade and scalp, I have no choice but to be a daytrader. As a matter fact, IB has thrown out T+3 for IRA's. (need for cash accts with Trade Day plus 3 day's prior to settlement and available cash to trade) Sort of a pseudo margin acct.
What I have found in the last 4 years is the lack of knowledge by CPA's, accountants, about trader status, usually 3 people and five opinions. Granted it is a gray area, unfortunately most of these people will wing it, call themselves advisors, and provide erroneous information to enhance their stature.
Suggestions, check with Mann Financial, traderstatus.com, tradersaccounting, fairmark.com,daytradingcoach.com/daytrading-free-educationtaxfiling.htm. Do your own research, take whatever you learn from this thread as questionable and certainly not the gospel.
In reference to the day trading and the questionable "frequent day trading" allowable by the IRS, surmised by other individuals in this thread, I know the following is applicable.
IRA Roth transactions
1. The holding period has no meaning - there is no distinction between long or short term capital gains
2. the sources of income or gain are treated the same - dividends, interest, capital apprectiation - again no distinction within an IRA/Roth
3. Internal transactions are not report to the IRS, there are just not any tax issues on buy or sell transactions within an IRA/Roth.
4. The IRS has no interest in record keeping, the only record keeping should be for yourself, marking your progress, etc..
5. There is no TAX Losses, the losses aren't a workable solution to your winnings.
6. Frequency of trades - the IRS does not care.... the IRS does care if you have "trader status", but in reference to Roth IRA, and trading Options, Forex, Futures, or Equities, there is no mention anywhere.
I trade with IB options, futures and equities, and due to the low commissions rate, the need to swing trade and scalp, I have no choice but to be a daytrader. As a matter fact, IB has thrown out T+3 for IRA's. (need for cash accts with Trade Day plus 3 day's prior to settlement and available cash to trade) Sort of a pseudo margin acct.
What I have found in the last 4 years is the lack of knowledge by CPA's, accountants, about trader status, usually 3 people and five opinions. Granted it is a gray area, unfortunately most of these people will wing it, call themselves advisors, and provide erroneous information to enhance their stature.
Suggestions, check with Mann Financial, traderstatus.com, tradersaccounting, fairmark.com,daytradingcoach.com/daytrading-free-educationtaxfiling.htm. Do your own research, take whatever you learn from this thread as questionable and certainly not the gospel.
what I have got is this...if you declare over 100k in income... and you trade in your ROTH or TRADITIONAL...and make money....then u got some splainin' to do, cause' you a candidate fro an Audit...I do not really think they will bother you if you do not have two of these three things..
100k
many trades
profitable in ROTH or Traditional...
If you have many trades and no profit no worries..
this is not just Futures...but ANYTHING
You know this is true because you heard it on ET
100k
many trades
profitable in ROTH or Traditional...
If you have many trades and no profit no worries..
this is not just Futures...but ANYTHING
You know this is true because you heard it on ET
Day trading IRA is a wide spread practice in the industry. If it is illegal, all of them should be banned. IRS cannot just pick on the big traders, and let go the smaller ones. You can challenge IRS in court if you become their target.
But based on takenoprisoners' posts in the other thread, he was screwed by IRS and closed his Roth.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=65057&perpage=6&pagenumber=4
I don't know why he didn't file a lawsuit, the amount is too small to justify? That makes me worried, the worst nightmare really happened.
But based on takenoprisoners' posts in the other thread, he was screwed by IRS and closed his Roth.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=65057&perpage=6&pagenumber=4
I don't know why he didn't file a lawsuit, the amount is too small to justify? That makes me worried, the worst nightmare really happened.
i dont think he got audited. it sounds like he got an opinion that it could be illegal and it scared him.