Trading loss carryover

B

browntrading

Hello All,
Last year (2019) I setup an llc (s-corp) and had trader status for my filing. I usually day/swing trade. This is my full time job and plan to continue this in future as well. This year in 2020, I had more than 1500 trades & huge $volume as well but this was concentrated in the first half of 2020. In the second half, i have very few trades as was/is stuck with my capital, had margin as well & did not wanted to take loss.

Now my question is, with this information will i be able to claim trader status this year as well ? will i be able to carry forward this huge loss ?

Last year I had a CPA do my tax filings but this year i am not sure if want to use him as he is very costly and i have huge loss as well this year.

Any advise will be greatly appreciated.
 
As far as I know to have trader status, you have to be trading on a consistent basis, month after month. Also, have to show profits otherwise, the IRS will deem your endeavor but, a hobby. In which case, you would be limited to a $3,000 loss limit and any excess carried forward the following year. Suggest you continue to use an accountant since, your tax return is important and you cannot afford to make a huge mistake when you file.
 
browntrading said:
Hello All,
Last year (2019) I setup an llc (s-corp) and had trader status for my filing. I usually day/swing trade. This is my full time job and plan to continue this in future as well. This year in 2020, I had more than 1500 trades & huge $volume as well but this was concentrated in the first half of 2020. In the second half, i have very few trades as was/is stuck with my capital, had margin as well & did not wanted to take loss.

Now my question is, with this information will i be able to claim trader status this year as well ? will i be able to carry forward this huge loss ?

Last year I had a CPA do my tax filings but this year i am not sure if want to use him as he is very costly and i have huge loss as well this year.

Any advise will be greatly appreciated.
More...

1. As for "trader status this year".... depends. Just because you were granted trading status last year doesn't mean you'll have it this year. Depends upon how IRS views your activity and how closely they monitor. (Sucks, I know.)

2. You can always carry forward losses... at $3,000/year. The big question is whether you can carry BACK losses. (Used to be you could... then later, you couldn't... then again later you could. I don't know the current status of that.)
 
browntrading said:
Hello All,
Last year (2019) I setup an llc (s-corp) and had trader status for my filing. I usually day/swing trade. This is my full time job and plan to continue this in future as well. This year in 2020, I had more than 1500 trades & huge $volume as well but this was concentrated in the first half of 2020. In the second half, i have very few trades as was/is stuck with my capital, had margin as well & did not wanted to take loss.

Now my question is, with this information will i be able to claim trader status this year as well ? will i be able to carry forward this huge loss ?

Last year I had a CPA do my tax filings but this year i am not sure if want to use him as he is very costly and i have huge loss as well this year.

Any advise will be greatly appreciated.
More...

If you filed as an LLC last year and didn't hear of any issues with the IRS - and you continued active trading this year - I don't see why your status would have changed. If you suffered losses, you will certainly benefit from filing the LLC versus a personal return.

Contact GreenTraderTax and ask about their consulting fee, to help verify your situation.
 
browntrading said:
Hello All,
Last year (2019) I setup an llc (s-corp) and had trader status for my filing. I usually day/swing trade. This is my full time job and plan to continue this in future as well. This year in 2020, I had more than 1500 trades & huge $volume as well but this was concentrated in the first half of 2020. In the second half, i have very few trades as was/is stuck with my capital, had margin as well & did not wanted to take loss.

Now my question is, with this information will i be able to claim trader status this year as well ? will i be able to carry forward this huge loss ?

Last year I had a CPA do my tax filings but this year i am not sure if want to use him as he is very costly and i have huge loss as well this year.

Any advise will be greatly appreciated.
More...

use the CPA.

If done improperly, that loss can be a long term problem for you.

Non-sequiter: if you are a bonda fide trader who is on mark-to-market, why would you hold a position for 6 months, not wanting to take a realized loss? Realized or unrealized, you will still pay taxes on it.
 
newwurldmn said:
use the CPA.

If done improperly, that loss can be a long term problem for you.

Non-sequiter: if you are a bonda fide trader who is on mark-to-market, why would you hold a position for 6 months, not wanting to take a realized loss? Realized or unrealized, you will still pay taxes on it.
More...

I did not take loss earlier as I was thinking it will come back and I will not have to take a loss.
 
Since you are the only one who will decide if you file TTS, you just can do it.
But, if no trade at all for few months could be justified with some creative work (Market conditions, learning...), I think you will have a hard time to explain the logic of just trading way less for so long, if IRS challenge your TTS filling. Not taking a loss will probably not be accepted as a business decision justified regarding Trader Tax Status and then, Mark to Market.
Last thing, if you setup a company for your trading activities, you probably also wanted to be perceived as a professional. I think keeping an accountant could help, especially if you try to file TTS.
Best guess should be to talk to a specialized lawyer or accountant, and ask for "how to justify the very few trades". Could be money well spent.
Good luck.
 
Loss in trading is a very common thing. More loss, reach near to profit according to me. We can learn from it and start with new strategy to get profit.
 
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