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This discussion comes at a very pertinent time for me. I am in the process
of being audited and the main contention of the IRS is that they propose to
disallow my schedule C on which I claimed Trader status as a business. They
propose to allow all deductions but to move them to Schedule A. This
subjects me to the Alternative Minimum Tax and of course, they propose to
collect interest on the additional tax I would owe. During the year I had
over 500 short term trades in the futures market.
Can anyone point me to the appropriate part of the tax code or court
rulings that would either justify or refute my claimed status. I would very
much appreciate it as I plan to contest this ruling.
Thank you,
Karl
>As previously discussed, trader status is not for everyone.
>As an alternative, you can of course carry the loss in excess
>of $3,000 forward to future years but you can also carry BACK
>Section 1256 losses 3 years.
>
>Section 1256 contracts are regulated futures contracts and
>non-equity options (and a couple other items). There are
>special rules about how to do this and it requires filing
>amended returns, but they are not difficult.
>
>If anyone ends up with a losing year this year, significantly in
>excess of $3,000, gains in some or all of the previous three years,
>and doesn't want to simply carry the loss in excess of $3,000 forward
>they might want to consult their tax advisor. If you had a loss last
>year and were not aware of the carryback when you filed, you might
>want to explore it with your tax advisor.
>
>Caution: I am NOT a tax advisor and this is not tax advice,
>just food for thought...
>
>Tom T.
>
>
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