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I am not an accountant - just a person who operated a business through a C
corporation for quite a few years. So this is just my non-professional point of
view. Unless securities trading is different than any other business - you can't
simply accumulate profits within a corporation and reinvest them. If the corporation
makes a profit through its business activies - it - as a taxpayer (remember - a
corporation is a separate taxable entity) has to pay taxes on those profits to the
extent that they're not distributed to employees in the form of salaries and/or
shareholders in the form of dividends.
Also - what you're talking about may involve personal holding company issues. A
discussion of this complicated area is beyond the scope of a mail list.
One thing to keep in mind with some forms of incorporation is that unless all of your
trading years are successful - you won't be able to pass through losses to your
personal return. Might make a difference if - for example - you have a working
spouse with earned income - and you sometimes make big money in one year - and lose
big money in other years.
This is not to say that incorporation might not provide some people with some tax
benefits. That's why I think that anyone who's doing this as a business - and not as
a hobby - should consult with a professional to determine the best form in which to
operate. Robyn
Jim Michael wrote:
> On Mon, 29 Mar 1999, Robyn Greene wrote:
>
> I have read the other replies in addition to Robyn's. I was approaching
> this from the standpoint of getting the maximum write off capability when
> trading is your *business*. That is, you get full deductions for all
> expenses incurred for the business, deductions for health insurance
> expenses, i.e. all the usual benefits of incorporation, not just a ruse
> to get trading status benefits. Also, I realize most people have to use
> part of the trading income for living expenses, but I was thinking more
> in terms of a corporation which reinvested all profits, therefore no
> salaries other than token salaries. Where would incorporation provide the
> best tax advantage for traders?
>
> Cheers,
>
> Jim
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