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I saw the following posting I need to address:
Unfortunately Tesser contradicts himself. That is because he also says that
"if you own or lease a trading seat on an exchange you will be subject to
self-employment taxes." Which seems to mean that he feels that if you trade
on-the-floor,in the pit, then you must pay self-employment tax, yet if you
trade off-the-floor then you don't have to pay the tax. This is the first
time I have heard about the "location of where the orders are generated" being
the determining factor of whether you are self-employed or not.
I understand this sounds confusing, but it is not my doing. This is the way
the law has been interpreted by the IRS. They seem to think that the
determining factor in whether SE tax is due (ie whether the income is EARNED)
depends on whether you are a professional trader - opposed to just a trader in
the business of trading your own account. A professional trader owns or
leases a seat on a national exchange, and/or trades from the floor - therefore
he, and only he is required to pay SE tax. This is the way the specialized
Financial Division of the IRS wants it, and this is the way we have been doing
it for years. I have many clients who trade full time off the floor and are
not required to pay it, and those who lease seats and are.
No one ever said this stuff was easy - who said "tax simplification" exists?
Imagine the people who get paid to write this stuff. I would like to be in on
their sessions - it would go something like this "Let's see what we can do to
create a law which will confuse the most people, by making the least sense,
and contradicting ourselves at least several times in every paragraph".
You don't think I could make this stuff up do you? I just interpret it.
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