tax sheltering strategies
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You can as long as you're boffing your secretary then it's business. If you're boffing the bosses wife it's even better you don't get the deduction but it's not all about the money now is it. Sometimes the sheer satisfaction of fisting your bosses wife or better yet daughter is well worth the loss of deduction kind of like that Mastercard commercial.
Oh well, Isn't America just the best........
Google this m3thrfcker.
bob111, I read your link to the irs. Question: when they say business, they are referring to an entity, right? Meaning, filing as a 'trader' like what lindq said, isn't the same.
cache, did you find the entity spreadsheet? Tell me more about your LLC. Was told I needed 2-people to form LLC in order for it to work out well.
lindq, is it true you don't have to pay self-employment tax when filing as a 'trader in securities'? The ira lady seemed to have told me otherwise. Can you really deduct all these trader-related-expenses filing as a trader? Also, how does m2m work? Who is it applicable to?
sideshowbob, isn't traderstrauss considered expensive, charging $600-$1200 for schedule D, and $650-$1500 for mark-2-market? Have you had personal experience with him? Was it worth it?
I've only had CPAs filed my taxes, so pardon my ignorance...what is schedule D and how does it work?
For those who are interested, yxy has a thread with bad experiences with Traders Accting. My personal experiences with them is that they haven't be reliable with their 'said reponse' time. I haven't used their service, have only gone through their proposal-plan-inquiries.
cache, did you find the entity spreadsheet? Tell me more about your LLC. Was told I needed 2-people to form LLC in order for it to work out well.
lindq, is it true you don't have to pay self-employment tax when filing as a 'trader in securities'? The ira lady seemed to have told me otherwise. Can you really deduct all these trader-related-expenses filing as a trader? Also, how does m2m work? Who is it applicable to?
sideshowbob, isn't traderstrauss considered expensive, charging $600-$1200 for schedule D, and $650-$1500 for mark-2-market? Have you had personal experience with him? Was it worth it?
I've only had CPAs filed my taxes, so pardon my ignorance...what is schedule D and how does it work?
For those who are interested, yxy has a thread with bad experiences with Traders Accting. My personal experiences with them is that they haven't be reliable with their 'said reponse' time. I haven't used their service, have only gone through their proposal-plan-inquiries.
http://www.fairmark.com/traders/intro.htm
i think, I read somewhere that there is specific number of trade MUST be made, to be eligible claim your trader status. yes, everyday you MUST trade and from what i remember-number is relatively big.
Now-what if you stop trade or miss few days? There more questions, than answers and for every one-you have to go to âprofessionalâ.
Imo trader status is nothing but the headache. i really doubt, that there is will be significant savings compare to just regular individual. and cost of tax preparation-please...it's take couple hours for me once a year and cost is zero.
i think, I read somewhere that there is specific number of trade MUST be made, to be eligible claim your trader status. yes, everyday you MUST trade and from what i remember-number is relatively big.
Now-what if you stop trade or miss few days? There more questions, than answers and for every one-you have to go to âprofessionalâ.
Imo trader status is nothing but the headache. i really doubt, that there is will be significant savings compare to just regular individual. and cost of tax preparation-please...it's take couple hours for me once a year and cost is zero.
Yes. Self employment tax is based on "earned income", and the IRS does not consider trading income to be earned. Go figure, but that is the way it is. So that is a huge advantage in filing as a trader, so long as you can meet the IRS definition of a trader.
And yes, you can deduct all expenses related to trading if you are a self-employed trader, as with any business.
If you are speaking with the IRS directly, you will find that more often than not, the reps have no clue about traders, or filing as a trader. And there is no hassle in filing as a trader, so long as you have the records and an accountant who has some knowledge of the filing status "trader in securities". It isn't that complicated. Further, if you are married and your wife has income, she can file under one status, and you can file as a trader.
You do not need to make a great number of trades to qualify for trader status. You don't even need to be a "day trader". However, you need to demonstrate clearly that it is your primary source of income, and that you are engaged in it regularly on a daily basis.
If you are doing one trade a week, you will get challenged. If you are doing ten a week, on a regular basis, then you are probably going to be fine. But if you are in a job with a salary, and you try this, the IRS will wack you. Trading needs to be your profession, and you need to be able to honestly back this up. If you are, and you can, there should be no fear.
I have been audited on these issues, and have fought the IRS and won. So I am not just speaking B.S. here.
But do be aware that the IRS changes rules constantly, so you do need to keep up to date. Unfortunately, the average phone rep hasn't a clue what a trader is, so you need to work with an accountant who has had some experience with the filing.
lindq, thanks for your info. I know I need to verify with an accountant with this, but just curious: if I only started up with trading again this Aug and transacted roughly 10 trades per week, (every week), at 1000-share-lots with high-prices, such as goog, meanwhile, maintaining a w2 job, do you think I may still qualify as 'trader status' for 2007?
bob111, great link! thank you. Read all 11 pgs, became certain that I do not want m2m election for 2008. I suppose it is not as important whether I file as 'trader status' for 2007 or not. Rather, I will let 2008's gains-momentum and trading activity determine if that's my stake for next year.
Still looking for CPA recommendations.
bob111, great link! thank you. Read all 11 pgs, became certain that I do not want m2m election for 2008. I suppose it is not as important whether I file as 'trader status' for 2007 or not. Rather, I will let 2008's gains-momentum and trading activity determine if that's my stake for next year.
Still looking for CPA recommendations.
Assuming that by "job" you mean that you are in a workplace during most of the day working for someone else who is paying you a salary, then no, you won't get trader status.
If you are doing a part time gig for a few hours a day, but spending most of your time in the markets and it is your primary source of income, then possibly. But prepare to be challenged, especially since you have not been trading most of the year.
See, the IRS does not want to give anyone trader status, because they are in business to collect max tax revenues, including self-employment tax. So anyone who is going to file as a trader needs to be prepared to defend that. That doesn't mean that one should be fearful, IF the facts are in your corner. If you are in doubt, chances are you should not go in that direction yet.
Another factor is how one has filed in the past. If this is the first year that someone files as a trader, then there is a decent chance the IRS is going to take a closer look, just as they do when someone first starts filing self-employment deductions like home office, etc. Their computers will kick it out as being unusual.
No big deal, so long as you are prepared, and don't have a lot of other 'hidden' issues that you would prefer not to discuss with them.
The first time I was challenged, it was simply via correspondence. The second time, I got pissed, and called for a meeting because they owned me money. I won the case, because their auditor was herself not aware of trader issues.
The IRS, like the rest of our government, is disfunctional. I truly believe that if it wasn't for the overall strength of our economy, our government would simply collapse from complete mismanagement. But with so much money kicking around, they can waste billions and just fade away to retirement. But that is another story.