Can anyone clarify for me how to calculate "basis" in terms on an LLC for trading? I do not mean the cost basis of the options/stock purchased but the LLC basis? Where I am confused is this...I lost about 3K in my LLC this year. When I pull a report from Maxit with my trades I have buy to open orders totaling somewhere around 150K. The money I directly deposited into my LLC brokerage account is about 20K. The 150K came from reinvesting profits I realized from option trades. So is my basis the 20K I put into the brokerage or is it the 150K of total purchases I made? Can I have a 150K basis with 3K in loses for the year? If so can I deduct items (even though I had a loss) from my AGI (regular job income) greater than the 3K?
The money I directly deposited into my LLC brokerage account is about 20K. This is your basis; your contribution to the LLC to become/as an LLC member. For tax purposes, the 20K represents a percentage of total LLC assets. It is that percentage which determines your "share" of the LLC gains, losses, credits, and deductions in it's entirety. Can I have a 150K basis with 3K in loses for the year? No. And how can have any sized loss when you've already stated The 150K came from reinvesting profits I realized from option trades. can I deduct items (even though I had a loss) from my AGI (regular job income) greater than the 3K? The LLC is completely separate form your "regular job income". The LLC will issue K1's to it's members, with appropriate gains, losses, credits, and deductions based on "share" of ownership within the LLC. These items are "passed-through" to you as an individual taxpayer. Regardless of the source (personal and/or LLC), you as an individual taxpayer by default are allowed a maximum annual 3K capgains loss deduction.
"No. And how can have any sized loss when you've already stated the 150K came from reinvesting profits I realized from option trades." Sorry maybe not explaining it well. I put 20K into a brokerage account. I invested that 20K into options and made realized profits. Those profits I reinvested and made and lost money. At the end of my last statement I have a loss for the year of 3K. So at the end of the year I have 17K in the account but I have made and lost much more. My question is - is my basis the original 20K I put into the brokerage or is it the 20K plus any profits I realized and reinvested? Those profits were my money that I chose to reinvest so why shouldnt they count towards my basis? Make sense? Sorry if I am not explaining correctly...trying to understand this for the first time myself....