Trader Taxation / CPA Experiences

Originally posted by limitdown


I haven't heard good things about that website and those guys, too arrogant and expensive. What were your experiences?
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i like them actually.. i agree they wanted way too much to actually prepare my taxes, but their tax guides saved my bacon.. of course, no one is perfect.. last year they were telling people that if that was your first year as a trader and had no positions to convert that filing a 3115 was not necessary as the IRS would consider you to be a "new taxpayer".. then the IRS apparently decided not to accept that line of reasoning.. but, its not their fault the rules arent clear cut.. at least they are staying on top of things.. ill probably buy their guides every year..

i do agree that many CPAs are arrogant.. i dont really get worked up over arrogant.. as long as a can negotiate a fair price and have confidence the person is shooting straight with me, i dont give a rip.. just my opinion..

you seem to have a bone to pick.. whats your story limitdown?

-qwik
 
profitseer,

mtm accounting also eliminates the need to account for wash sales for active traders - which can become an accounting nightmare.

As to other posts in this thread:

I've used greentrader.com as well. It was a choice of last resort as I did not find a better alternative. Yes, they are expensive and yes, Mr. Green is very confident in his abilities. But he knows his stuff and I decided that in the accounting business, you get what you pay for.

As I posted earlier, I was surprised at the conflicting answers I rec'd from different "experts" on questions related to traders' taxation - and oftentimes, I would not have known that the answers given were either not correct or not entirely defensible had I not done my own research and probing.

It seems to me that each trader, and hence taxpayer, has to develop his own philosophy of tax risk. The tax laws and rules and their application is oftentimes not black and white, but gray! Oftentimes, I've found myself making reporting and disclosure decisions based on my understanding of what the intent of the regs are - thus generally leading me to a conservative position (and ultimately paying more in tax). Clearly, not everyone would agree with my approach - but they don't have to defend what I do and I don't have to defend what they do.........
 
Originally posted by qwiktrade


you seem to have a bone to pick.. whats your story limitdown?

-qwik
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anyone starting a thread is picking a bone,

this topic needs air--ing, and we all benefit from a healthy discussion of these topics. after all we collectively are marking "them" to market, and it doesn't seem to be coming up all roses, now, does it?

I concur that some of these websites are informative and way over priced.
I concur that there's a need to establish a firm cap on expenses before incurring them, instead of "blank checking" these guys.
I concur that full knowledge vs. ignorance is essential and required.

So, if that's picking bones, then we can volture together for more issues :p
 
Profitseer,

One other benefit I thought of related to MTM acct: Because you treat all positions as closed out at the end of the accounting year, most folks agree that you can report your P&L on an account basis instead of a trade by trade basis. Certainly, you would need to be able to back up the account totals in detail if audited, but the paperwork at tax reporting time is simplified.
 
Swish, Futures are already marked to market by default.
The new mtm election allows losses to be converted from cap loss to ordinary loss, thereby reducing your ordinary income.

But I have no ordinary income and I'm not losing, so I can think of no reason to elect mtm because my futures account is already mtm for accounting purposes.

But then again, I can see no harm either in electing mtm.

I will get that guide, thanks for the link
 
Originally posted by limitdown

I concur that there's a need to establish a firm cap on expenses before incurring them, instead of "blank checking" these guys.
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I definitely agree with this. There are many firms that will charge you "research fees" on things they should already now (isn't that why you are paying them?) This includes local firms as well as web firms.

My wife's a tax accountant (not CPA) and a few years ago worked for a firm that was bought out. The new firm charged clients all these outrageous fees ($150 just to meet the new owner, $25 for copies, etc.) and the new owner was a !@#$^&! So, she didn't even go with the new firm, she just went out on her own.

Due to the fact that I'm a trader and manage traders, she has become very knowledgeable about the different trader-related issues, including proprietary as I'm proprietary and she has a number of proprietary clients. Over the years, I've seen her combing the tax journals and consulting with other accountants for answers to some questions that come up. She says that at the time, she may be researching for one client, but she will not bill that client for this time because it benefits all her future clients and they pay for her knowledge. (Coming from an IT consulting background where every hour was billable, I had to get used to this concept and the fact that it didn't add to our family's bottom line<g>).

So, make sure you find an accountant that is knowledgeable in dealing with YOUR trading business and won't bill you extra for something they already know. They should be able to give you a flat rate and stick with it.
 
Originally posted by profitseer
Swish, Futures are already marked to market by default.
The new mtm election allows losses to be converted from cap loss to ordinary loss, thereby reducing your ordinary income.

But I have no ordinary income and I'm not losing, so I can think of no reason to elect mtm because my futures account is already mtm for accounting purposes.

But then again, I can see no harm either in electing mtm.

I will get that guide, thanks for the link
More...

Profitseer,

If you elect MTM on a futures account you lose the favorable 60/40 cap gains treatment. The transformation to ordinary income precludes you from using the 60/40. If you a profitable trading futures I wouldn't suggest electing MTM. You could elect MTM in a stock account if you had one and use that as ordinary income/loss.

The folks at the IRS don't know what's going on lots of times anyways. I know of one person that did MTM on futures and still uses the 60/40, got audited, and didn't have to pay additional penalties or tax because the agent didn't know or understand the issue themselves.

I'm a CPA, do some tax work and find the tax code ridiculous. It does keep me busy when I want to work because people have a fear of the code. A monkey could fill out a 1040-EZ, yet I get probably 50 of them a year just because people find them confusing.

I don't claim to be an expert in trading tax issues. most of my knowledge comes from items which directly affect my 1040's, etc.


This is a question for anyone that has related knowledge or experience.
I'm curious as to the fees some of these tax services for traders charge. Anyone have any answer as to rates and expected fees to complete the required forms for a trader making 5-10 R/T per day? Basic, not filing 3115 or anything special.

Thanks

Later,

Cracked
 
Originally posted by profitseer
Swish, Futures are already marked to market by default.
The new mtm election allows losses to be converted from cap loss to ordinary loss, thereby reducing your ordinary income.

But I have no ordinary income and I'm not losing, so I can think of no reason to elect mtm because my futures account is already mtm for accounting purposes.

But then again, I can see no harm either in electing mtm.

I will get that guide, thanks for the link
More...

you da monster.... (www.monster.com)

good to hear someone's net positive...

care to share your approach?
 
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