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PureBytes Links
Trading Reference Links
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Here's a link to the Center For Futures Education catalog. The have a
pamphlet by Ted Tesser "The Investor's Guide To The Taxation Of Commodity
Futures And Futures Options" for $6.95.
http://www.thectr.com/cat2.html#taxation
-----Original Message-----
From: Dick <dick@xxxxxxxxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Thursday, March 11, 1999 1:22 PM
Subject: Re: Using "Trader" Status for Income Taxes
>Bill, I haven't seen it mentioned, so I just thought people might
>be interested in the actual IRS investor status sections.....They're
>surprising easy to read these days !
>
>For example:
>
>http://www.irs.ustreas.gov/prod/forms_pubs/pubs/p5500305.htm
>
>the pub 550 has quite a bit, but do a search of the (enormous) IRS
>website for more.
>
>Dick
>
>P.S. I've had my bookmarks since last year, so be sure to check the
>current status of everything......It wouldn't surprise me if the IRS had
>some old pages.
>----- Original Message -----
>From: Bill Coward <wrcoward@xxxxxxxxx>
>To: <metastock@xxxxxxxxxxxxx>
>Sent: Thursday, March 11, 1999 8:00 AM
>Subject: Re: Using "Trader" Status for Income Taxes
>
>
>>Chuck,
>>
>>I agree that the book was probably misnamed; only one chapter was devoted
>>to the "trader" status issue.
>>
>>The reviewer you quoted was a little confused when he said you lose
capital
>>gain treatment and must pay Social Security and Medicare taxes on your
>>self-employment income. All gains or losses from trading are reported on
>>Sch D, the form used for reporting capital gains and losses. No
>>self-employment taxes are paid on capital gains, only on earned income
>>reported on Sch C. To recap, trade income and losses are reported on Sch
>>D, and trade-related expenses are reported on Sch C.
>>
>>IRS rules for determining participation in a trade or business are
>>surprisingly lenient. It is possible for an individual to be involved in
>>numerous separate trades or businesses simultaneously. You may want to
>>check out the requirements in the Sch C instructions.
>>
>>Thanks for your response.
>>
>>Bill
>>
>>----------
>>> From: Chuck Wemlinger <yeti@xxxxxxxxxxxxxxx>
>>> To: metastock@xxxxxxxxxxxxx
>>> Subject: Re: Using "Trader" Status for Income Taxes
>>> Date: Wednesday, March 10, 1999 4:05 PM
>>>
>>> Hi Bill,
>>>
>>> What did you think of the book? I went to Amazon to check it out and
was
>>> suprised to see it was about $80. The readers reviews were interesting.
>>> Most felt it did not dedicate enough coverage the subject of taxes as it
>>> applies to the Trader as the title would indicate.
>>
>>> Here is one of the more interesting reviews:
>>> "This book gives a unique point of view so, it does not duplicate what
>>you
>>> can get in other tax books. It advocates you try to qualify for 'Trader
>>> Status', and there are several Supreme Court tax cases concerning this
>>> difficult to qualify status. This status means that your TRADE as a
>>serious
>>> business, hold postions for generally less than a month. All your
>>expenses
>>> become fully deductable on Schedule C, HOWEVER you lose Capital Gain
>>> treatment AND must pay Social Security and Medicare taxes on your Self
>>> Employment income but you can set up a pension plan and/or SEP IRA. I
>>think
>>> there is too great a danger of a nasty IRS audit, and not enough taxes
>>> saved. A difficult route for a Futures Trader, nearly impossible for a
>>Stock
>>> trader except for some SOES traders."
>>>
>>> My understanding of the situation is that if you show income from
another
>>> source like a job or business, then there's little chance that you can
>>> convince the IRS that you're in the business of trading (even if you
>>trade
>>> commodities and hold for short periods). Therefore while you show
>>> gains/losses on Schedule D, you cannot deduct or expense any of your
>>> operating costs like telephone, computers, software, etc.
>>>
>>> If you're not certified or licensed and trade only your own commodities
>>> account as your primary source of income are you only self-employed or
>>are
>>> you in the "business of trading", and can expense or amortize your
>>various
>>> expenses? I guess it's up to the individual to decide it they want to
>>risk
>>> a potential test by the IRS.
>>>
>>> -----Original Message-----
>>> From: Bill Coward <wrcoward@xxxxxxxxx>
>>> To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
>>> Date: Tuesday, March 09, 1999 7:37 PM
>>> Subject: Re: Using "Trader" Status for Income Taxes
>>>
>>>
>>> >Lou,
>>> >
>>> >According to Ted Tesser, author of TRADER'S TAX SURVIVAL GUIDE, and a
>>CPA
>>> >and tax accountant specializing in investment taxation, trading
activity
>>is
>>> >considered to be capital gain income (or loss) and should be reported
on
>>> >Schedule D. It should not be reported on Schedule C, the form for
>>> >reporting earned income from a business or trade, nor should it be
>>reported
>>> >on Schedule SE, the form for calculating self-employment tax on earned
>>> >income from a business or trade. He goes on to say that, since the
>>income
>>> >is not earned, no retirement plan contribution should be made against
>>it.
>>> >
>>> >Thanks for your feedback.
>>> >
>>> >Bill
>>> >
>>> >----------
>>> >> From: Lou Baker <louab@xxxxxxxxxxxxx>
>>> >> To: metastock@xxxxxxxxxxxxx
>>> >> Subject: Re: Using "Trader" Status for Income Taxes
>>> >> Date: Tuesday, March 09, 1999 12:40 PM
>>> >>
>>> >> Bill, although not a direct answer to your question, look carefully
at
>>> >the
>>> >> self-employment tax you may be liable to pay if you claim a trade or
>>> >> business, unless you max out on other earned income, of course. Lou
>>> >>
>>> >>
>>> >
>>>
>>>
>
>
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