TTS Tax Deductions

[dschubring]

Elite TTS Professionals,
2020 was the first year I qualified for TTS and I have an accountant helping me navigate the taxes being TTS.
My question is what write offs are you all claiming on your taxes being you are TTS?
Here are some things I have been told by my accountant and was wondering if there is anything I'm missing:
1) Website subscriptions for trading related information (i.e. WSJ, IBD, Barrons)
2) Office equipment
3) Home Office (Percentage of mortgage driven by square footage of office space)
4) Margin interest (Is that true?)

Also, I understand that wash sales do not need to be included but I am a bit confused how to figure that out from the 1099 my brokerage sent me.

Thanks,
Dave

 

[BMK]

With respect to your home office, if you own the home, then it is the applicable percentage of the mortgage interest. And you get to deduct a percentage of your utilities, such as gas, water, electric and internet access. You can take a deduction for depreciation for a portion of the cost of the house (but not the land). This affects your basis in the house. It also affects what happens when you sell the house. Your accountant can educate you further. I'm just warning you that you cannot simply deduct a percentage of your monthly mortgage payment. That's not how it works. And when you treat part of your home as business property, it has consequences when you sell the house. You may well have to pay tax on some of the capital gain on the sale of the house.

You can probably download a history of your trades into an Excel or CSV spreadsheet, and that may allow you to see the raw data that will show the "true" gain or loss on each transaction, without regard to any wash sales.

If you are paying a qualified accountant who understands TTS, then he should be ask you for that data. He might be able to figure it out from the 1099, but it would be a hell of a lot easier if you gave him the data in a spreadsheet so he can manipulate it himself. You certainly don't want to pay him for all kinds of extra time to manually input each transaction from a paper Form 1099. Even a PDF version of the 1099 does not have the flexibility that you get with a spreadsheet.

With that being said, most 1099 forms have a column that identifies the amount of the wash sale that is disallowed under the normal rules, and that amount is usually built into the gain or loss shown on the 1099. In other words, the gain or loss on the 1099 has been adjusted to reflect the fact that the wash sale "does not count" when calculating your gain or loss. It isn't that hard to simply back out the amount of the wash sale from the adjusted gain or loss.

For example: If the 1099 shows you have a loss on a particular sale of $119.36, but it also shows that a loss of $92.47 was disallowed due to the wash sale rules, then your unadjusted loss is $211.83.

But be careful how you treat negative numbers, and make sure you understand how your broker is expressing the results. If it shows a gain on a sale of $152.41, and also shows a disallowed loss of $52.41 due to the wash sale rules, then the unadjusted result should be a gain of $100.00.

Hope this helps.

Margin interest is certainly a deductible expense.

BMK

 

[virw]

Greentradertax also have a guide book that details which deductions you can /should take if you qualify for TTS.