The Tax Thread

I thought we could use a thread devoted to Taxes. This is all things taxes regarding trading.

One example, Advantages/disadvantages for different situations (equities, futures, forex, etc) as well as benefits of filing sole-proprietor vs LLC or as a CTA/professional, etc.

If you have something to share on the subject please chime in.

Mike

there is no advantage if you trade equities, this much i know.

I have spent a lot of time with this issue. Questions and issues I had to figure out.

Do you have a LOT of deductions or expenses other than trading fees?
Do you need "earned income" to offset other things?
Is all of your income from trading or do you have other things?
Does your spouse work or have income?
Wash sale rule? This was a big concern to me as I trade mostly the same ETF's, no longer an issue as I switch over to futures.

For me the self employment tax negated all benefits of filing as a business. Self-Employment Tax

Great timing for a thread as the IRS rules are certainly going to change for traders over the next couple years.

Y'all may want to check out Traders Accounting

They specialize in tax issues for traders (equities/futures/options/forex), have webinars, emails, etc. that may be helpful to some on this forum.
I do not work for them or get any kickbacks for mentioning them LOL !

Hope this helps,
gulab

Has anyone created an S-Corp instead of an LLC to trade in?

I have used Traders Accounting in the past to help get set up correctly. They are good, but they don't give it away for free. Everyone's situation is different, and there are reasons to set a business up in different forms. It can also depend on where you live, so it does not hurt to talk to your accountant as well (or find one). A local person can also get business entities in place for you. Traders Accounting has the trading business expertise, but a local person that you can go talk to might also serve this purpose.

Personally, I have a corp that controls an LLC that controls my trading accounts. For my situation, this was the best set up. For others that would be overkill.

aslan 

Personally, I have a corp that controls an LLC that controls my trading accounts. For my situation, this was the best set up. For others that would be overkill.

Aslan - can you share in what situation the corp/LLC setup is beneficial?

Thanks,
gulab

gulabv 

Aslan - can you share in what situation the corp/LLC setup is beneficial?

I am not an account or tax advisor, so please talk to someone that knows what they are doing, as everyone's situation is different. There are a lot of options, and you have to understand the tradeoffs for each different business model, based on what your objectives are.

Well hopefully someone will open up, the point of the thread is to discuss tax situations We know you aren't a CPA giving legal advice



Mike