Hi, I started to trade spot forex in July 2007, with a very small account (700USD), it went up (max at 850USD) and down but now my account is down to 100USD, and I did not withdraw anything from it. Do I need to declare anything to the IRS, or even mention in any way my trading activities ? Thanks for any help.
Monkey Brain. Brokers do not issue 1099's on Forex Trading, however ,that does not you relieve you of the responsibility for reporting your gain or loss. The benefit of forex trading is if you lose money as you have stated, it is fully deductible, even if the amount exceeds the capital loss limit of $3,000. The trades are reported on Form 4797, Part II. You can also make an election with the IRS to have the trades treated as Futures subject to IRC 1256 contracts, in which case your profit is taked at 60% LTCG and 40% STCG rates. Hope this helps. You can reach us at Daytradertax.com if you need more info. Paul S. Mann CPA
Per Green: "Line 21 of Form 1040 for investors or Form 4797 Part II for business traders" I think he'd fit in to the former category.
Thank you all. I think I will then file the Form 6781, and then both line 21 of Form 1040 and Form 4797 Part II. In addition my broker will send a 1099 to report the interest (so they write on their site), and I will join a detailed schedule of my trading.