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The Tax Thread


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The Tax Thread

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  #41 (permalink)
East Rochester, NY
 
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eDanny's Avatar
 
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I guess you are right, the leverage didn't apply. So having a big open position means little left for other trades.

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  #42 (permalink)
 
 
Posts: 1,176 since Nov 2009

we are talking about the same thing, just two different points... I am focusing on how to contribute and the challenges, you are focusing on what to do after one contributes.

in your case, you are already funded... in my case, I have to continue to fund it to make it a decent size.. $10-15K will only let me trade 1 contract in futures and that is still not enough to trade options for me.

so you are correct... you can take one of your Roth IRA's and trade it... we are not arguing that point.

my recommendation, if they are all Roth's.. consolidate them ... instead of several have like 2 of them.. or maybe 3... use one for Trading Futures, another one for holding real estate, and another one that you will continue to contribute where you may have a strategy that is more conservative (10-15% per year)... that is basically what I am doing but all under a single umbrella of a Solo 401(k)... the Roth is just to trade futures once it grows to $25K, so another 2 years before I will do anything serious on it.

everyone's situation is different... but that is what I would do if I had significant Roth Assets... I would take advantage of the current real estate situation and get some rental properties that I could exit from in 2-3 years, or sooner, at a profit and grow that account..


MWinfrey View Post
I absolutely hate the way I express myself sometimes. I think we are still talking about 2 different things. Let me be a bit more specific in an effort to reduce the confusion I've caused and let me put it into a context of my personal situation.

I have several Roth accounts that have existed for years. I intend to use one of those accounts for trading purposes. I will not continue monthly contributions to that Roth. So, aside from fees, the only changes to that account will be the profit or loss that I incur trading using that account. Therefore, any profit or loss in that Roth account is nontaxable assuming the IRS rules don't change.

Again to be clear I will only be doing this with a proven profitable trading method.

So, have I muddied the waters even more? I still have to clear all this with my tax professional but does my approach make sense or am I out to lunch?

This is a great discussion and one that I appreciate a lot.


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  #43 (permalink)
 
 
Posts: 1,176 since Nov 2009



eDanny View Post
I guess you are right, the leverage didn't apply. So having a big open position means little left for other trades.

hence why is better to long ITM/ATM calls if you think that GOOG is heading north .. allows you to "leverage" more... and your risk is limited to your premium... which enables you to make multiple bets ..

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  #44 (permalink)
Lubbock TX
 
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sysot1t View Post
we are talking about the same thing, just two different points... I am focusing on how to contribute and the challenges, you are focusing on what to do after one contributes.

in your case, you are already funded... in my case, I have to continue to fund it to make it a decent size.. $10-15K will only let me trade 1 contract in futures and that is still not enough to trade options for me.

so you are correct... you can take one of your Roth IRA's and trade it... we are not arguing that point.

my recommendation, if they are all Roth's.. consolidate them ... instead of several have like 2 of them.. or maybe 3... use one for Trading Futures, another one for holding real estate, and another one that you will continue to contribute where you may have a strategy that is more conservative (10-15% per year)... that is basically what I am doing but all under a single umbrella of a Solo 401(k)... the Roth is just to trade futures once it grows to $25K, so another 2 years before I will do anything serious on it.

everyone's situation is different... but that is what I would do if I had significant Roth Assets... I would take advantage of the current real estate situation and get some rental properties that I could exit from in 2-3 years, or sooner, at a profit and grow that account..

Excellent...thank you for walking me through that.

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  #45 (permalink)
 
 
Posts: 1,176 since Nov 2009


MWinfrey View Post
Excellent...thank you for walking me through that.

yw... and you are ahead of the game let's put it that way... I only realized the whole Roth thing about 6 months ago.. I always avoided anything after tax since I dont get the write off, but then I came to find out that I could do quite a lot of things within the IRA/Roth IRA/Solo K world that are not mainstream but legally allowed, and my thought process changed. Now, I dont mind the $5K a year on after tax, considering the benefit of tax free cash when I retire .. luckily for me, I have another 25 years before that really happens, so I gained the knowledge and education in time..

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  #46 (permalink)
Lubbock TX
 
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sysot1t View Post
yw... and you are ahead of the game let's put it that way... I only realized the whole Roth thing about 6 months ago.. I always avoided anything after tax since I dont get the write off, but then I came to find out that I could do quite a lot of things within the IRA/Roth IRA/Solo K world that are not mainstream but legally allowed, and my thought process changed. Now, I dont mind the $5K a year on after tax, considering the benefit of tax free cash when I retire .. luckily for me, I have another 25 years before that really happens, so I gained the knowledge and education in time..

good for you...you are way ahead of the game. i turn 59 on March 31. I've always been a bit slow off the blocks. I mentioned this in an early post of this conversation but because I don't have "real job" income, my earnings off trading won't effect my social security eligibility.

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  #47 (permalink)
Dallas, TX
 
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very interesting discussion I have lots to learn from all the futures.io (formerly BMT) members!

so your Roth IRA custodian has to allow futures trading? I'm with Vanguard right now for my Roth IRA

what are some of the recommended IRA custodians that allow trading futures from your Roth IRA

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  #48 (permalink)
 
 
Posts: 1,176 since Nov 2009


gulabv View Post
very interesting discussion I have lots to learn from all the futures.io (formerly BMT) members!

so your Roth IRA custodian has to allow futures trading? I'm with Vanguard right now for my Roth IRA

what are some of the recommended IRA custodians that allow trading futures from your Roth IRA

Vanguard is awful IMO, you are better off with Fidelity/Schwab/TDA... you get the big name and the ability to trade equities, etf's, options on both, mutual funds, and if your account large enough IPO's and private placements. Schwab/Fidelity are always offering private placement/subscriptions..

for futures trading... You can take the account to TOS(Penson) or IBKR... without having to go to a third party custodian.. other than that, you can use alternative custodians such as Millenium Trust and PENSCO trust... those are the two that I picked after researching the 5 available on the market place and interviewing their back office and compliance department.. you can then turn around and open an account with Crossland, VFM, etc or hold real estate on them, or anything allowed by the IRS... they have a cost (anywhere from $500-$1000) per year depending on the amount of assets and the number of subaccounts... so if you just want to trade the markets there are no cost options with TOS/IBKR ...

btw, you should research them as well... we might have different requirements, but PENSCO/MTC were the ones with the least amount of issues...

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  #49 (permalink)
Naperville IL
 
Experience: Intermediate
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Just wondering what software do you use for tax reporting?

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  #50 (permalink)
Austin, TX
 
Experience: Advanced
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Trading: Futures
 
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How many of you guys are incorporated? I'm seriously considering it, because by the time you realize that it's necessary/advantageous, it's more of a pain at that point.

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